Sujoy, 30, had made big investment plans for the financial year 2016–17. But, owing to ill health and work pressure, he could not stick to the schedule. The tax deducted at source (TDS) on his salary in January was huge. Sujoy was not worried, though. He had some tax-saving investments planned for February and March. These would bring down his tax liability. Even if the employer cut too much TDS, Sujoy could claim an income tax refund when filing his tax returns.
What is an income tax refund?
As an earning citizen of India, you are liable to pay income tax. But, at times, you might end up paying more tax than you need to.
This is often the case when you are not in the tax bracket. You may receive payments after accounting for TDS. Or, you may be doing your investments last minute. Your employer does not receive your tax-saving details on time. So, it implements a higher TDS than is necessary.
You can correct this when filing your income tax returns. Claim an income tax refund for the excess amount.
Getting an income tax refund
Your employer will give you a copy of Form 16 at year-end. Do check if you have provided all the right details. The form presents information about your tax-saving investments and exemptions. That includes payments towards Public Provident Fund and National Savings Certificates. Any tax-saving fixed deposits also appear in Form 16. You get tax benefits on life and medical insurance premiums as well. Expenses like rent and the children’s tuition fees also help save tax. A Form 16 with all the right details is the first step to getting a refund.
But it could be that your Form 16 misses some tax benefits. Or, you might not have known about certain exemptions. In this case, you would have to submit Form 30. Make sure to attach a proof of your income tax returns in this case.
The refund can come to you in two ways:
1. Online income tax refund: The Income Tax Department may credit the refund in many ways. It could use ECS (electronic clearing system). Or, it could use RTGS or NECS to make the transfer to your account. You would need to provide your bank account number, the MICR or NFSC code, and your address.
2. Refund via cheque: This is a standard cheque that reaches you via post. Make sure to provide the correct bank account number and your postal address.
Tips to ensure a seamless refund process
• File returns on time: Filing your returns within the due date gives you some leeway. If there is an error in your form, you can still send a revised return. But you cannot do so if you file your returns late. A discrepancy could hamper your refund process.
• Take the online route: E-file your returns and opt for the digital mode of payment. This will help you cut through the bureaucracy. E-filing your returns is a quick and hassle-free process. You can even complete the verification online. Choosing the digital payment mode makes things simpler. You do not have to worry about the cheque getting lost in the mail.
• Check your ITR: Before you submit your returns, make sure to cross-check all the details in your ITR form. An error would mean you have to re-submit the details. The delay would slow down your refund process as well.
Your income tax refund should reach you within four months. But make sure to track the refund status. You can do so from the Income Tax Department’s website in case of online income tax refund. In case you are awaiting payment by cheque, use the reference number given to you.