Income Tax Refund for Individual assesees is refund of income tax and it arises when an individual has paid more income tax, by way of tax deducted at source, than he is liable to pay.
In the case of any salaried individual, the employer (company or firm) may deduct tax at source on the taxable income, if the employee has not made any tax saving investments or produced evidence of such investments, at the time of tax deduction. However, the employee may declare such tax saving investments in his or her income tax return and claim refund of the excess tax deducted at source.
How to determine Income Tax Refund?
An assessee may determine the Income Tax Refund amount by making the following calculations:
- 1. Calculate net income chargeable to tax for the financial year (Financial Year for Indian Income tax purposes is from April 1 a year to March 31 of the subsequent year).
- 2. Ascertain the income tax liability on the net income chargeable to tax.
- 3. Determine the income tax deducted at source. In the case of salaried individuals, this may be determined from Form 16.
- 4. Finally, the refund amount may be determined by applying the following formula to the amounts calculated above.
Income Tax Refund = Amount determined in step 3 above (Income Tax Deducted at Source) - Amount determined in step 2 above (Income Tax Liability).
How to claim the tax refund?
The income tax return will show the amount of tax refund (if any). If the income tax return contains such information, you may not have to make any separate claim for refund. The tax refund cheque will be sent to the address mentioned in the Return of Income, filed with the Income Tax department.
If you had missed any tax saving investments in arriving at the correct refund amount in the income tax return, you may furnish a revised Return of Income detailing the method used to arrive at the revised refund amount. In this case, you may also have to claim the tax refund by submitting Form 30.
You can check your income tax refund status online.
When can I claim for a tax refund?
Income Tax refund may be claimed within one year of the last day of the assessment year.
how to proceed if the tax refund has not been received?
If you do not receive your income tax refund within a reasonable time, which normally is within a maximum of one year from the date of filing the tax return but may vary from case to case, you can either visit the tax department’s office to ascertain the reasons or you may write a letter, enclosing a copy of acknowledgement of the tax return, to the concerned Income Tax Assessing Officer.
If it is still not addressed, you may write a letter to the jurisdictional Chief Commissioner of the Income Tax with a copy to the Grievance Cell and the concerned Income Tax Officer. You may enclose copies of previous letters written to the Income Tax Assessing Officer and a copy of the tax return filed.
How can I plan my taxes so that I get my tax refund faster?
If you do not want to wait for a long time to get your tax refund, you need to make sure that you do tax planning as early as possible. You need to assess your tax liability and if need be, take additional help from a tax expert.
You also need to invest or save expense bills according to the assessment of your tax liability. Finally, if you are a salaried individual, you need to declare your investments to your employer so that they can deduct the correct amount of tax from your salary.
In conclusion, it is important that you keep track of any refunds you are eligible for, since there have been several complaints about refunds being delayed for a long time.