What to do if the income tax refund is delayed?

What is an Income tax Refund?

An income tax refund arises in case of a mismatch between the tax amount paid and the actual payable amount. For instance, if a taxpayer has paid Rs. 10,000 in taxes for the fiscal year 2022-23, yet their true tax liability is only Rs. 8,000, they are eligible for a refund of Rs. 2,000 from the Income Tax Department. Once the income tax return has been verified, the income tax department will initiate the tax return process. After the tax return is processed, it will take around four to five weeks for the refund to be credited to the bank account of the taxpayer.

The income tax department had been constantly working on the refund process. The time was reduced to 16-17 days for FY 2022-23, and the aim is to reduce it further to 7 to 10 days for the financial year 2023-24.

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Eligibility of Income Tax Refund

To be eligible for an income tax refund, a taxpayer must file an income tax return. Here are the instances in which a taxpayer becomes eligible to claim a tax refund:

• Advance Tax Payment: If the advance tax paid on estimated income exceeds the actual tax liability of a taxpayer, they are entitled to claim a refund for the excess amount paid.
• Tax Deducted at Source (TDS): If the tax deducted at source (TDS) from sources such as salary, interest, professional fees, or other incomes is higher than the tax payable on regular assessment, the taxpayer can claim a refund for the excess TDS amount.
• Excess Self-Assessment Tax: If the self-assessment tax paid by the taxpayer is more than the actual tax liability determined through regular assessment, the taxpayer can claim a refund for the surplus amount paid.
• Tax Paid in Both India and a Foreign Country: If an individual is taxed on their income in both India and a foreign country with whom India has a double taxation avoidance agreement, they may be eligible to claim a refund for the excess tax paid on the income, subject to the terms of the agreement.

By filing an income tax return and meeting any of these conditions, taxpayers can ensure they receive any refunds owed to them by the tax authorities. To file ITR, click here. If you have filed your tax return already, know the tax refund status here.

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What are the possible reasons for the Income Tax Refund delay?

There could be several reasons why your income tax refund has not reached you yet. Here are some common ones:

• Processing Time: Tax refunds can take time to process, especially during peak tax season. If you've recently filed your taxes, it may simply be a matter of waiting for your tax authority to process your return and issue the refund.
• Errors on Your Tax Return: If there are errors or discrepancies on your tax return, it could delay the processing of your refund. Double-check your return to ensure all information is accurate, including your Social Security number, income amounts, and deductions.
• Mismatch in Form 26AS: A mismatch between the tax deducted at source (TDS) information in your income tax return and Form 26AS could delay your tax refund. Form 26AS acts as a record of all your tax payments linked to your PAN number.
• Incomplete Documentation: If you claimed certain deductions or credits that require additional documentation, such as proof of expenses or receipts, your refund may be delayed until the documentation is provided and verified.
• Back Taxes or Debt Owed: If you owe back taxes or other debts to the government, your refund may be offset to cover these amounts. The income tax department can withhold all or a portion of your refund to wrap up outstanding debts.
• Changes in Bank Account: If you requested a direct deposit but provided incorrect bank account information, it could be the wrong account number or your name is different from what is registered with the Income Tax Portal. your refund may be delayed or returned to the IRS. Double-check your bank account details to ensure they are accurate.
• Return Under Scrutiny: To ensure everything is accurate, the Income Tax Department sometimes selects returns for scrutiny, and this might delay your tax refund a bit, but only until they complete their further assessment.
• Mail Delivery Delays: If you opted to receive your refund by mail, it could be delayed due to postal service issues or an incorrect mailing address.
• If Return Filed Offline: If you have chosen to file your tax return offline instead of online, it may take more time for the Income Tax Department to reconcile all your paperwork and process the refund.
• Identity Theft or Fraud: If your identity has been compromised or if someone has filed a fraudulent tax return using your information, it can delay the processing of your legitimate refund while the issue is resolved.
• False Claim Discovered: If your false claims result in an overstated refund, the tax authority will eventually identify the error. They'll then issue a notice demanding repayment of the wrongly issued refund, plus potential penalties and interest charges. Even if you resolve the issue this year, it can cast a shadow on future tax filings. The tax authority may be more likely to scrutinize your returns for several years after discovering a false claim, and it will delay your refund for the next financial year.
• Bank Account Verification To receive your ITR refund, ensure your bank account is pre-validated. The name on your bank account must match the details on your PAN card. The Income Tax refund will be credited to the bank account you provided in your ITR. Incorrect account details can lead to non-receipt of the refund.
• E-verification of ITR E-verifying your income tax return is mandatory, and without verification, return is not processed. Complete this process within 30 days of filing your ITR.
• Form 26AS Discrepancy Form 26AS summarizes all taxes paid under your PAN. If there's a mismatch between the TDS details in your return and Form 26AS, it can delay your refund.

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What to do if Income Tax refund is pending?

If your refund hasn't been credited to you due to a mismatch in account numbers, follow these steps:

Double-check Account Information

• Review the bank account number and IFSC code you provided when filing your tax return.
• Ensure they are correct and match your bank account details.
• Contact your bank to confirm that your account is still active and free from any holds.
• Also, make sure your bank account is pre-validated in your Income Tax account.

Contact the Income Tax Department

Reach out to the Income Tax Department to request a refund re-issue. When contacting the Income Tax Department, provide them with:

• Your PAN (Permanent Account Number)
• The assessment year
• The refund amount
• You can contact the IT department by phone, email, or e-filing portal.

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How to raise a ‘Refund Re-issue’ request?

Request Refund Re-issue Through ITD e-Filing Portal steps:

• Visit the ITD e-filing portal and log in to your account.
• Navigate to the "Services " tab.
• Click on the "refund reissue " link.
• You will get the details of the Assessment Year for which the refund got failed.
• Select the Assessment Year and click on Continue.
• On the next screen, you will get the bank details. Validate the bank if it is not validated.
• After validation, select such a bank and submit the request.

The ITD will promptly review your request and ensure that the refund is credited to the right account without further delay.

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What to do if you have received less refund than what you claimed?

An Income Tax Refund is one of the most anticipated outcomes after filing your ITR. While many have already received their refunds, others are still waiting. If the refund you received doesn’t match your expectations, let us explain why this might have happened and what steps you can take:

The first action you can take is to file a rectification request under Section 154 of the Income Tax Act, 1961.

How to file a rectification request?

1. Log in to the Income Tax e-filing portal using your valid user ID and password to access your account.
2. Navigate to the 'Services' section and Click on 'Rectification' from the dropdown menu.
3. Click on the 'New Request' button.
4. Choose the correct assessment year and ‘Income Tax’ from the drop-down menu and click ‘Continue.’
5. Choose the ‘Request Type’ from the ‘Request Type’ drop-down menu.
6. Fill in the required details about the error, such as the nature of the mistake and supporting documents.
7. Once you've completed the form, submit the request.
8. You will need to e-verify the request on the verification page to complete the process.

Types of errors you can rectify

As per Section 154(1) of the Income Tax Act, you can file a rectification request. Here are the list of errors you can correct under this:

• Arithmetic mistakes
• Clerical errors (incorrect names, PAN numbers, or amounts)
• Factual errors ( Incorrect income figures or deductions)
• Errors due to overlooking compulsory provisions of the law

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How to check the status of Income Tax refund?

To check if you’ve received an income tax refund. Just log in to the income tax portal. Click on ‘e-file,’ > ‘Income Tax Return,’ > ‘View filed Returns.’ Pick the relevant assessment year for the refund status. If you prefer not to log in, you can use the ‘Tax2win refund status’ feature to check your refund status.

Have you filed your ITR for FY 2023-24? If so, you can easily check your refund status in just a few simple steps. If you need assistance with filing your Income Tax Return, our online CAs are experts in ensuring precise ITR filing and maximizing your tax refund. Book an eCA now!

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