Taxation is a policy adopted by almost all countries to raise public revenue. The raised revenue offers financial backing for various government schemes and service provisions. Taxation policies in India are categorised into two groups: Direct and Indirect Tax. Direct Tax applies to income earned by individuals and organisations. Indirect Tax is applicable on the sale of goods and services.
Income tax refund is a common concept of Direct Tax. As the name suggests, under income tax refund, you receive a refund amount in case of a difference in the Tax paid and the Tax you were liable to pay. The article offers more details about refund eligibility, application, and the procedure for online checking of the tax refund status.
Who is eligible for an income tax refund?
Following are common circumstances under which you can claim an income tax refund:
- Your employer deducts excess Tax Deducted at the source. If self-employed, by the client.
- Excess TDS deducted from your fixed-income investment interest earnings.
- TDS is deducted from your investment earnings that are not eligible for tax deduction, such as Public Provident Fund and Equity-Linked Savings Scheme.
- If Tax is deducted on the exact source of income twice. Such a circumstance occurs with non-resident Indian investors. Their investment earnings can be taxable in both India and the country of residence. However, this can be avoided given the country of residence has signed the Double Taxation Avoidance Agreement.
- If you have paid extra advance tax. If you do not make a single large payment at the end of the financial year, opt for Advance Tax This allows you to pay your taxes in advance.
How to claim an income tax refund?
The easiest way to claim your income tax refund is by carefully filling the Form 16. Declare your investments and other financial obligations that are eligible for tax deduction. House rental, education fees, Home Loan repayment, and Insurance premiums payments are various financial obligations you can declare in Form 16. If you have missed out on declaring your investments and financial obligations for tax refund, you can always fill out Form 30.
This form requests the Income Tax Department to check for your excess tax payment. Remember to submit necessary documents to support your refund claim with the form.
How to check income tax refund status?
There are typically two ways to check income tax refund status: by visiting the Income Tax E-Filing portal or the Tax Information Network website. You can access the Income Tax E- Filing portal using your login credentials. Enter your PAN number to access the Tax Information Network website. On either website, look for the ‘Income tax refund’ tab to enquire about its status.
Once your refund claim is assessed and approved, the refund fund gets credited to your designated Savings Account or provided with a cheque. A refund is initiated between 20 to 45 days after filing Income Tax Returns.
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