Address cause of tax refund failure, then request reissuance: Experts

Failure to verify return, incorrect bank address are key reasons for not receiving timely refund

The Income-Tax (I-T) Department has issued tax refunds amounting to more than Rs 1.14 lakh crore to over 1.97 crore taxpayers between April 1, 2022 and August 31, 2022. If you filed your Income-Tax Return (ITR) on time and haven't got your refund yet, you need to take a few steps.

Check your refund status

Generally, tax refund is credited to your bank account within two-three weeks of receiving the intimation under Section 143(1) of the I-T Act. Suresh Suarana, founder, RSM India says, “An assessee who fails to receive the refund as stated in the intimation should first check the refund status on the NSDL website and read the remarks therein. If there are no remarks, or the I-T Department hasn’t provided specific reasons for withholding the refund, the assessee should raise a refund re-issue request.” 
 

Refund status can also be checked on the e-filing portal. Deepak Jain, chief executive, TaxManager.in says, “There you will get all the details regarding the dates on which ITR was filed, e-verified, processed, and refund issued.”

Key reasons for delay
 

Several factors could be responsible for the delay. Maneet Pal Singh, partner, I.P. Pasricha & Co says, “You may not have verified the ITR or the bank details you provided may be incorrect. There may be a delay in processing the ITR. There could also be a mismatch in the figures reported in the ITR vis-a-vis figures reflected in Form 26AS, Annual Information Statement (AIS), Taxpayer Information Summary (TIS) or Form 16. It is also possible that there is an old outstanding tax demand.”

Bank mergers could play spoilsport. Naveen Wadhwa, deputy general manager, Taxmann, says, “The IFSC code or account number may have changed over the past year due to these mergers. In such cases, the taxpayer needs to provide the updated IFSC or account number.”
 

The refund could also have been adjusted against an outstanding tax demand. Wadhwa adds, “In such cases, the tax department serves a notice under Section 245 that it proposes to set off certain demands against the refund.” Check for outstanding tax demands on the e-filing portal under “Pending actions”.

Refund status and their meaning

If the e-filing portal shows “Under processing”, it means the tax department hasn’t processed the ITR yet. “Demand determined” means the tax department has determined a higher demand than the amount mentioned in the ITR. “Processed with no refund” means no refund is pending.

As for “Refund failure”, Jain says, “Incorrect bank account number can prevent you from receiving the refund.”

If you have received the refund, check your bank account. Raise a query if there is a discrepancy in the amount received.

Finally, “Refund adjusted” means the current year’s refund has been adjusted against an outstanding demand.

You’re entitled to interest 
 

According to Section 244A, an assessee who is entitled to a refund must also receive, in addition to the refund, simple interest on the amount at the rate of 0.5 per cent for each month or part of the month.

According to Surana, there can be two possible scenarios: the assessee may have filed his ITR within the due date, or after the due date. If he filed it within the due date, interest on the refund will be paid from April 1 of the ensuing financial year till the date on which the refund is granted by the I-T Department.

Surana adds, “If the return was filed after the due date, interest will be paid from the date of furnishing the ITR till the date on which refund is granted.”  

Mistakes to avoid 
 

To avoid delays in receiving the refund, provide the correct bank details and verify your ITR within the applicable time limit. Ensure that you report income and deductions correctly. Don’t claim excess deduction. Singh says, “If a taxpayer knowingly claims a deduction or exemption for which he doesn’t have the required documents, it is tantamount to tax concealment.”

On submitting a request for reissue of refund, Wadhwa suggests: “Before doing so, address the reason due to which your refund failed.”

How to check refund status

Step 1: Log-in on the new income tax e-filing portal

Step 2: On the ribbon, click on ‘e-File’ > ‘Income Tax Returns’ > ‘View Filed Returns’ option from the drop down menu

Step 3: Click on ‘View Details’ relevant to the assessment year for which you want to check the refund status

Step 4: The status of your returns will be displayed along with information such as assessment year, acknowledgement number, date of filing ITR, and reason for refund failure (if any)
 

Source: RSM India