Reasons for delay in Income Tax Refund

Most of the taxpayers in India awaits the time when he/she gets the tax refund. The government of India proceeds the refunds after you have filed the tax returns. Taxpayers should file ITR in order to claim a refund of income tax on account of excessive deduction of tax at source or payment of advance tax or self-assessment tax. Many a time there can be a delay in income tax refund. There could be various reasons for not getting the Income Tax Refund including inaccurate information uploads, incomplete filing, wrong bank transactions, etc.

Check Income Tax Refund Status
Track Income Tax Refund online using PAN. The Income Tax Department issues the refund once the ITR is processed. Check your ITR refund status.
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Check Income Tax Refund Status
Track Income Tax Refund online using PAN. The Income Tax Department issues the refund once the ITR is processed. Check your ITR refund status.
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Reasons for delay in income tax refund

Sr. No. Refund Status Meaning Action to be taken

1.

 

Refund not determined Or Your return is pending for processing with the Assessing Officer

Refund request under process. The delay could be at 2 levels:

  • The IT department is taking time to process your request
  • The IT department has already processed but there is a delay at the bank’s end
Make sure that your ITR is E-verified within 120 days from the date of e-filing. If already E-verified you should wait, and check the status after some days
2. Incorrect Account Number provided
The bank account number mentioned at the time of filing your return is wrong
You can make a Refund Reissue request with the correct account details
3. Mismatch in the TDS/TCS claimed This happens because of a mismatch in Form 16 or Form 26AS and TDS/TCS claimed File an online response by logging into the income tax portal or file a revised return
4. ITR processed but submit rectification request This generally happens because of a mismatch in assessee and Tax Department calculations
Check details in intimation received u/s 143(1). Action to be taken accordingly: To submit an online response or file a revised return
5. Defective Return u/s 139 (9) Your return was incomplete or improper Login to your Income Tax India Online account and check for detailed reasons
6. A return submitted but not E-verified You have successfully filed your ITR. But e-verification of the same is still pending E-verify your ITR
7. Return processed and tax demand determined After processing your return the tax department is of view that you should still pay some taxes You can check details in intimation received u/s 143(1) and if not satisfied reply online or make the due payment
8. No Demand No refund found It means your ITR has been duly processed and there was no refund due Check details in intimation received u/s 143(1) and respond accordingly
9. Refund adjusted against Demand You had a refund payable but the same has been adjusted against some taxes payable for previous years Check notice you must have already received u/s 245 in this regard

To know more about when the income tax refund becomes due, how to claim it, you must read out the guide on Income Tax Refund Status.

FAQ

If I have paid excess tax, how will it be refunded to me?

The excess tax can be claimed as refund by filing your income tax return (ITR). After your return is processed and provided the tax department accepts your refund claim, the amount claimed as refund would be credited back to your bank account

What should one do in case of discrepancies in actual TDS and TDS credit as per Form 26AS?

In such a case, the taxpayer may not be able to claim the credit of the correct TDS. Hence, the taxpayers are advised to confirm the tax credit appearing in Form 26AS and should reconcile the difference if any. If a discrepancy is due to the deductor, then he may file a TDS/TCS correction statement and correct the same.

How to claim a refund for TDS deducted due to late PAN submission?

Your employer can file the “Correction Statement” and provide your PAN information. In this case, you have to file IT return even if your income is below the tax slabs.

Income Tax Refund in India: Eligibility, Procedure and Types

A taxpayer becomes eligible for an income tax refund when taxes paid are higher than your actual tax liability inclusive of interest. It could be in the form of advance tax, self-assessment tax, TDS, etc. In the following instances, the taxpayer becomes eligible to claim tax refund:

  • When the advance tax paid on estimated income is higher than the actual tax liability of a taxpayer.
  • If tax deducted at source (TDS) from salary, interest, professional or other incomes is higher than the tax payable on regular assessment.
  • When self-assessment tax paid is in excess of actual tax liability.
  • When an income is charged in India and in a foreign country. (with whom the Indian government has an agreement to avoid double taxation).

How to claim Income Tax Refund?

A few basic things to keep in mind if you want to claim a refund.

  • Don’t forget to submit Form 12BB Investment Declaration to your employer
    • It contains details about HRA, Leave Travel Allowance, and other section 80 tax deductions.
    • Your employer will calculate accurate TDS based on your investment declaration form and you will save yourself from excess TDS.
  • Entered all the deductions in your income tax return.
    • If you don’t enter deduction details in tax return then your tax liability will be higher than the TDS deducted by an employer.
    • You will end up paying tax which you are not liable to.
  • File an income tax return to claim a refund.
    • If you do not file an income tax return then all your tax credits including TDS and advance/self-assessment taxes will go in vain.
    • Income Tax Department will not automatically pay you a refund just because you have paid taxes.
    • Declare all the incomes and deductions in ITR to show that your taxes paid are greater than the actual tax assessed.

Once you have filed your income tax return, you need to wait for assessment from the Income Tax Department. Here what you need to do:

  • You will receive an intimation u/s 143(1) once the return is processed.
  • It will contain a comparison of income and tax calculation as per your tax return and as per the Income Tax Department.
  • The refund is correct if the refund amount as per ITR and Intimation is the same.
  • When there is a discrepancy you need to check the calculations for reasons of mismatch.
  • If there is any calculation error then you can rectify your return u/s 154(1)

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Types of refund status

Once a tax payer files his return, they want to know the status of their refund. IT Department has classified different refund statuses for the taxpayer. It is important to understand the meaning of refund status. Since refund status determines the next course of action that needs to be taken by the taxpayer.

Check Income Tax Refund Status
Track Income Tax Refund online using PAN. The Income Tax Department issues the refund once the ITR is processed. Check your ITR refund status.
Explore
Check Income Tax Refund Status
Track Income Tax Refund online using PAN. The Income Tax Department issues the refund once the ITR is processed. Check your ITR refund status.
Explore

Different Refund Status on income tax e-filing website:

Refund Status Meaning Course of Action
No e-filing has been done for this assessment year You have missed filing the return for that assessment year. OR The paper return was filed for that year.    File your Income Tax Return immediately. You can file your return from here.
Not Determined IT Department has still not processed your return Confirm if your return is filed and duly e-Verified. 
Refund Paid IT Department has sent the refund to you.  If you have not received a refund yet: In case of direct credit to your bank account contact your bank. In case of refund cheque, check out with the post department.
No Demand No Refund This means you have claimed a refund in your return but as per the department’s calculation, you are not liable for a refund.  In case of any error in a filed return, revise your return. OR If you have received an intimation then understand the reason of difference and then file rectification return.
Refund Unpaid Income Tax Department has sent a refund to you but either your address is wrong or bank details provided are incorrect.   Find out the reason for refund failure and then raise a refund reissue request
ITR processed refund determined and sent out to Refund Banker The department has sent the refund details to the refund banker. Contact your bank. 
Demand determined Department has rejected your refund claim and raised an outstanding demand.  Understand the notice. If you find that your own refund request was erroneous then pay the demand. OR If there is a mistake made by the department, you can file a rectification.
Contact Jurisdictional Assessing Officer Whenever the department needs some more information regarding your ITR. You receive this message. Contact your AO via telephone, mail or post.
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Interest on Income Tax Refund

Many times the taxpayer does not get the refund in due time, in such a case Income Tax Department pays interest on late refund. However, no interest shall be payable if the amount of refund is less than 10% of the tax as determined under section 143(1) or tax determined under regular assessment. Section 244A mentions the provisions in this regard which are as follows:

Amount of Interest on Refund

  • Where the refund arising to the taxpayer is out of any TDS/TCS or tax paid by way of advance tax, then the taxpayer shall be entitled to interest calculated at the rate of 0.5% for every month or part of a month. Interest shall be allowed for a period commencing from the 1st day of April of the assessment year to the date on which the refund is granted if the return is furnished on or before the due date of filing of return specified under section 139(1) otherwise interest shall be allowed from the date of furnishing of return of income to the date on which the refund is granted
  • Where the refund arises to the taxpayer is out of taxes paid by way of self-assessment tax then the taxpayer shall be entitled to interest calculated at the rate of 0.5% for every month or part of a month. Interest in such a case shall be allowed for a period commencing from the date of furnishing of return of income or payment of tax, whichever is later, to the date on which the refund is granted.
  • In any other case (i.e., a case in which refund is due to reasons other than those stated above), interest shall be calculated at the rate of 0.5% for every month or part of a month for a period commencing from the date/dates (as the case may be) of payment of the tax or penalty to the date on which the refund is granted. Further, the expression “date of payment of tax or penalty” means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand.

Taxability of Interest on Income Tax Refund

The interest amount is taxable under the head “Income from other sources”. Further, while filing returns for the financial year (FY) in which the refund was given, the interest will be taxable as per the tax slab rate of the person.

FAQs

Why am I not getting any refund?

Your may not be getting refund for one of the following reasons:
1. You may not have filed an income tax return for the relevant assessment year
2. Your taxes paid matches your total tax liability for a relevant assessment year
3. You might have forgotten to claim taxes paid on your return
4. You might have furnished incorrect bank account details in your return

Is income tax refund taxable?

No, refund received by a taxpayer is not taxable. But, any interest received on the refund is taxable in the year in which refund is received by a taxpayer.

How long does it take to get a tax refund?

Income Tax Department processes the refund only after processing your ITR. Generally, it takes 30-45 days from the date of e-verification of your Income Tax Return to get your refund credited. Further, IT Department is planning on processing refund faster in coming years.

What needs to be done if the refund is not processed?

Taxpayer’s records are transferred to the jurisdictional assessing officer by CPC after a particular time period for every assessment year. Taxpayers receive an intimation regarding the same. Therefore, once the AO receives the files, one can follow up for a refund by submitting a letter in this regard to the jurisdictional assessing officer and follow up personally at regular intervals.

Where will I get my income tax refund?

You will receive your refund directly in your Primary bank account. You can choose the primary bank account while filing your ITR.

What to do if my tax Refund is returned?

If your tax refund status is ‘refund returned’ then it means when ITD had tried to credit the refund to your bank account, but it failed. In such a case you are required to submit a refund reissue request.