File a rectification request in case you have received a low refund

While recalculating your tax liability, ensure you include income from all sources

If you had met the extended deadline of December 31, 2021, for filing income-tax return (ITR), you should have received your tax refund by now. Tax experts say many taxpayers have received a lower refund than they were entitled to. If this has happened to you, first understand the reason and then take a few remedial steps.  

Pre-filling to blame

Some experts say the new income-tax portal is to blame. According to Utsav Trivedi, partner, TAS Law, “There are several genuine cases of taxpayers receiving lower refunds due to glitches in the new ITR portal.”

The new portal provides ITR forms with pre-filled data such as income, salary, interest on fixed and savings deposits, dividend income, and so on. Trivedi says, “After you file your return, the IT Department matches it with the pre-filled form to issue tax refund. If they find a mismatch, they go by the prefilled form.” As a result, your refund could be lower than the amount you expected on the basis of your ITR.  

Sometimes, the refund is lower due to issues with tax deducted at source (TDS). Mumbai-based tax and investment expert Balwant Jain says, “Form 26AS contains details of all the TDS deducted. Sometimes, the proper TDS amount is not reflected in the form. This could be because the entity deducting TDS did not submit the full amount. Sometimes, this happens because the deducting entity committed a clerical error, such as filling in the wrong PAN.”

AIS-related issues

Starting from this financial year, the IT Department began to use data contained in the annual information statement (AIS). AIS contains information on several high-value transactions. Angad Sandhu, partner, PSL Advocates & Solicitors says, “Some of the early taxpayers did not have access to AIS, which went live only in October. Hence, they missed out on reporting some parts of their income, and are now receiving lower tax refund.”

Missed incomes and transactions

Many people who have multiple share trading accounts disclose the transactions in only their primary account, leaving out those conducted via their secondary accounts.

Many taxpayers also fail to properly compute incomes other than salary. Jain says, “Salaried individuals file ITR based on Form 16 but forget to include interest from fixed deposits, savings accounts, etc.”

Those with multiple bank accounts at times fail to report the interest earned in all of them.  

What should you do

First, inform the assessing officer about your problem. Trivedi says, “Contact the assessing officer immediately via telephone, e-portal or post and explain that you have received lower refund. Then submit the request for rectification.”

Recalculate the refund you are entitled to by factoring in information contained in the AIS, and incomes from multiple trading accounts and bank accounts.

Next, file the rectification request. Jain informs that this can be raised using the recourse option provided on the ITR e-filing portal.

Sometimes, refund requests get rejected because there is an outstanding tax amount. The taxpayer receives a notice from the department informing him about the amount due.

On receiving the notice, the taxpayer should again check all his supporting documents to recalculate both his tax liability and refund receivable. Trivedi says, “If the figures you had filed in the original ITR are correct, file a rectification supporting your claim. If you find that the ITR you had filed was incorrect, pay the IT Department’s outstanding tax demand within the time limit mentioned in the notice.”  

How to file a rectification request online

Step 1: Login to the income-tax website

Step 2: Go to ‘e-File’ and select ‘Rectification’ from the drop-down menu

Step 3: Select the ‘Order/Intimation to be rectified’ as ‘Income Tax’ and the relevant assessment year, and click on ‘Continue’

Step 4: Select the appropriate ‘Request Type’; select the reason for seeking rectification and the Schedules in the return being changed; upload required documentation

Step 5: On successful submission, a reference number is generated and sent for processing to Centralised Processing Centre, Bengaluru