Raise refund reissue claim if tax rebate is delayed, say experts

Do this only if there are no remarks or reasons given by I-T division for withholding it

The Central Board of Direct Taxes has issued income-tax (I-T) refunds worth Rs 70,120 crore to more than 2.61 million taxpayers between April 1 and September 6. Of this, personal I-T refunds of Rs 16,753 crore have been issued in over 2.47 million cases, despite technical glitches in the new e-filing portal.

Earlier this month, the department asked taxpayers who received notices to respond online for getting an early refund. The refund is usually issued within 10 days of income-tax return (ITR) submission, although it can be delayed for a wide variety of reasons.

Archit Gupta, chief executive officer, Clear, says, "In some instances, the I-T department cannot process ITR and issue refunds unless taxpayers respond to notices/intimations issued by the I-T department."

Reasons for delay

One of the major reasons for not getting a refund is that the I-T department adjusts the refund payable against any pending liabilities of the taxpayer.

Suresh Surana, founder, RSM India, says, "It is important that the taxpayer keeps tabs on all outstanding tax liabilities to avoid unnecessary adjustment and blockage of refund. Furnishing incorrect bank account details is also one reason a taxpayer may not get his/her refund in a timely manner."

Another reason for non-processing of refunds includes the determination of demand by the tax department after processing the return. This may be because of a discrepancy in the amount of tax deducted at source (TDS)/tax collected at source claimed by the taxpayer vis-à-vis amount reflected in Form 26AS, difference in the interest computed under Sections 234A, 234B or 234C, etc.

Surana says, "Such discrepancy can be rectified by filing a response against the intimation under Section 143 (1) issued by the I-T department."

Note that taxpayers sometimes don't get a refund if the ITR is not verified within 120 days from the date of filing ITR. Such tax returns are treated as defective and the refund may not be processed by the tax department.

Gopal Bohra, partner, N.A. Shah Associates, says, "It may happen that the return is processed with refund, however, there is an outstanding demand for other years. In such a case, the department issues a notice under Section 245. Unless the taxpayer responds to the notice, a refund is not issued."

Sometimes the ITR is not processed, and that compounds the delay.

Gupta says, "Sometimes it's even for reasons like your bank account is not pre-validated."

Note that you receive a refund only if your bank account is linked with your permanent account number.

Interest on refund - Section 244A

In case a taxpayer files ITR with a refund claim and the refund amount is in excess of 10 per cent of total tax liability, he/she is entitled to receive a refund on such excess tax payment. The I-T department gives 0.5 per cent interest per month from April 1 of the subsequent fiscal year.

Bohra adds, "However, if the return filed is delayed, then the taxpayer will be eligible for interest from the date of filing return of income as against April 1, if refund is on account of TDS/advance tax."

Interest to be paid by you

Due to the hiccups in the new tax-filing portal, there's a possibility you might have got an excess refund amount. Section 234D of the I-T Act, 1961, is taken into account then.

Surana says, "Here, the assessee is liable to pay simple interest at the rate of 0.5 per cent on the whole or the excess amount refunded, for every month or part of a month comprised in the period from the date of grant of refund granted to the date of such regular assessment."

Delayed refund

First check the status of the ITR refund on the e-filing portal and check the remarks of the I-T department pertaining to refund. In case of no remarks or specific reasons given for withholding refund, you should raise a refund reissue request. In case you haven't got the refund within a reasonable time frame, you can file a grievance with the Centralised Processing Centre for quicker release of refund.

How to raise a refund reissue request  

Step 1: Log in to e-filing portal 2.0 (www.incometax.gov.in) using your credentials

Step 2: Click on ‘Refund Reissue’ from the drop-down in 'Services' tab

Step 3: Select 'Create Refund Reissue Request’. Click 'Submit'

Step 4: Select the Return for which you need to raise a request

Step 5: Details such as PAN, Return Type, Assessment Year, Acknowledgement No., Communication Reference No., Reason for Refund Failure, and Response are displayed

Step 6: Select the bank account to which the tax refund is to be credited and click 'Continue'

Step 7: Select the appropriate mode of verification and verify the request

Step 8: A success message will be displayed confirming the Refund Re-issue request submission.