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As a taxpayer, when you file your income tax return, you may be eligible for a tax refund. In general, unless extended, the deadline for filing income tax returns is July 31 of each year. A tax refund is a payment made to a taxpayer by the income tax department if the former pays more tax than required.
Taxpayers may claim a refund on their income tax if their tax liability is less than the total of their withholding taxes and estimated taxes paid, plus any refundable tax credits claimed. Tax refunds are typically issued after the taxpayer files return for the previous financial year.
Who is eligible for the income tax refund?
There are numerous instances in which you may be eligible for a refund. Among them are the following:
-If the tax you paid in advance on a self-assessment basis exceeds the tax payable on a regular assessment basis.
-If the tax deducted from your salary, interest on securities or debentures, dividends, or other income is greater than the tax payable on a regular assessment basis.
-If the tax assessed on a regular basis is reduced due to a correction to an assessment process error.
-The same income is taxed in a foreign country (with which India has an agreement to avoid double taxation) and in India.
-If you have unreported investments that provide tax benefits and deductions.
-If you discover that your tax liability is negative after deducting the taxes, you’ve paid and the deductions you’re allowed.
Is tax refund taxable?
Income tax refunds are not taxable because they are the difference between tax liability paid and total taxable income considered for tax liability in a given year; however, interest on income tax refunds is taxable as income from other sources.
Points to note
-Cross-check the bank account information twice with the passbook to ensure that there are no errors in the bank account information.
-Verify the address details with the income tax department to ensure that any refunds received via cheque are delivered to the right address.
-Submit your ITR before the due date to ensure that your income tax refund is processed quickly.
-Download your form 26AS and check to ensure that the amount of excess tax paid is reflected on the form.