Once we file our taxes, the Income Tax department examines if the assessee has paid more tax than he/she should have, every assessment year. Those who have paid tax in excess are eligible to receive refunds from the Income Tax department. This situation usually arises in cases where the Tax Deducted at Source (TDS) is more than the tax liability or in situations when an advance tax is paid.
How are funds credited to an assessee’s account?
Funds are credited through direct credit or cheque. The income Tax department transfers all refunds to the tax refund banker, which is the State Bank of India branch (SBI IFSC Code) in Mumbai.
- Direct credit: Direct credit refunds are made to the assessee’s bank account. For this, the assessee has to provide bank account details including the name of bank, branch, and IFSC code. For example, if the taxpayer holds an account with SBI, he/she has to furnish the below details:
|Name of Bank||SBI|
|Name of Customer||Ramachandran Iyer|
|Branch||Richmond Road, Bangalore|
|SBI IFSC Code||SBIN0030222|
It is also important to mention the communication address in this case.
- Refund through cheque: If the taxpayer has not furnished details such as IFSC code, the refund process can still be initiated. In such a case a cheque will be issued in the name of the assessee, which will be payable to his/her respective account number.
What is an income tax refund?
A tax refund is basically the amount of money that the assessee has paid over and above the tax liability. The income tax department has to legally refund this amount by the end of the financial year. The following is the eligibility criteria for tax refund:
- In cases where the taxpayer has paid tax in excess based on incorrect self-assessment and if this amount paid is more than the total tax payable
- In cases where the TDS from income slips, debentures, interest income, etc, are more than what the taxpayer has to pay
- Due to any kind of miscalculation or error during the assessment process
- In cases of double taxation. For example, if the taxpayer is taxed on the same income both in another country and in India. This should not be done because the government has a policy in place to avoid double taxation. Therefore, in such cases, a tax refund has to be made
- In case the taxpayer has not declared any of the tax saving investments he/she has made
How to claim for an income tax refund?
Tax refunds can be claimed by all taxpayers by filing for income tax returns during the assessment year. The deadline to file returns is usually July 31st every year. It is also possible to claim a refund for the previous 2 financial years. All taxpayers can check the status of their refund online without any hassle by keying in PAN and other documents details. In case the refund amount has not been credited or the cheque has not been issued, the taxpayer has to initiate a reissue request. It is necessary to update all bank details for this purpose including name, account number, IFSC code and bank branch details.