Refund of Income Tax: Steps to claim Income Tax Refund

Refund of Income Tax: Steps to claim Income Tax Refund

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Created By Admin Last Updated Mon, 23-Nov-2020

Income Tax Refund: The title would have given an idea what an Income tax refund is, yes got it right if you think, Income Tax Refund is the refund or money you receive back from the government on paying the Income Tax. But actually, it is the amount that you have overpaid to the government in the previous year.

Refunds are processed when taxes paid are higher than your actual tax liability (including Interest if any). The overpaid amount can be in the form of advance tax, Self-assessment tax, tax deducted at source (TDS) etc.

Concept of Tax Refund

There can be various reasons a taxpayer may get a refund amount (or owe more than a trivial amount to the government) Below are some of the points why refunds are processed.


Ø  You could have made an error in filling out the investment proofs for your organization. As a result, the amount of taxes deducted by your employer exceeded your actual tax liability for the particular FY.

Ø  TDS deducted on your income, on bank FD’s or bonds.

Ø  If you have paid advance tax on self-assessment and you may have exceeded your tax liability for the financial year according to regular assessment.

Ø  In case of double taxation, for example – when a person is a citizen of one country but derives income from another country. However, there are a few countries with which India has Double Taxation Avoidance Agreement (DTAA). This means you can claim a tax refund if you are a non-resident Indian working in a foreign country with which India has DTAA. For example, you hold a non-resident ordinary (NRO) deposit in an Indian bank. The interest earned on such deposits shall be taxed as per the applicable slab rate. However, if you qualify to be a tax resident of the foreign country where you reside, you may claim a tax refund for the TDS deducted on interests earned in India on your NRO deposit.

Know-How to Check Income Tax Refund Status?

Income Tax Refund status can be checked by following these steps:

Ø  Go to the NSDL website.

Ø  Fill in the details, including PAN and AY and click ‘Proceed’.

On the next page, your income tax refund status will be displayed.

Key Points about Income Tax Refund

Ø  File your returns before the due date so as to avoid the penalty for non-filing of returns.

Ø  Make sure the bank details mentioned at the time of filing of return are correct to avoid any delay in refund of the tax amount. But in case you have made an error or wrong details submitted by you then In that case, “refund unpaid ‘will be displayed as refund status.

Ø  Make sure that the overpaid tax amount paid by you is also reflected in form26AS.

Ø  Ensure the timely review of the Income-tax refund status to take the applicable steps to correct the issue, if any.

Hope this blog gives you an understanding as to why Refunds are processed and how to check the status of the refund yourself.