What is a Tax Refund?

A Tax Refund is referred to the reimbursement to taxpayers of any extra amount paid to the government.

In simple words, a tax refund arises when you pay tax higher than the real Tax Liability. It could be in the form of:

• Foreign tax credit
• Tax deducted at source
• Self-assessment tax
• Advance Tax

Eligibility to Claim Tax Refund

• If the tax paid in advance on the self-assessment Basis is higher than the payable tax on the regular assessment basis
• If interest on dividends, Debentures or securities; and salary TDS is more than the payable tax on the regular assessment basis
• If the charged tax on the regular assessment basis is decreased because of an error in the assessment procedure
• If the same Income has been taxed both in India and somewhere in abroad
• If you have investments Offering deductions and tax benefits that have not been declared

How is Income Tax Refund Claimed?

To claim an income tax refund, the government has not proposed a separate process. All you would have to do is file your Income Tax Return (ITR). However, make sure that your return has been -

• Verified electronically through Aadhar number OTP
• Verified physically by posting the acknowledgement of ITR-V to the Centralised Processing Centre (CPC) within 120 days of filing; or
• EVC generated

Interest on Tax Refund

In most of the situations, taxpayers receive the refund amount that is higher than the refund claimed in the returns. This difference signifies the interest on the refund. Payable by the Income Tax Department, the interest is mandatory if the refund is up to 10% or more than the paid tax amount.

Under the section 244A of the Income Tax Act, you can easily find provisions regarding the refund and interest rates. Basically, on the refund amount, the interest amount is 0.5% a month. Such an interest is calculated from 1st April of the assessment year till the refund or grant date.

How to Check Tax Refund Status?

If you’ve applied for the refund, you can check the status online by following the below-mentioned steps:

• Visit the official website of the income tax department
• Log into the website with your user ID and password; you can also use the date of birth or date of Incorporation to login
• Enter captcha
• Visit the My Account section
• Click on Refund / Demand Status
• There, you can find the refund status for your ITR filing