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Maximize Your Income Tax Refund

What to do if the income tax refund is delayed?

Updated on: 13 Jul, 2024 12:33 PM

Over 6.5 crore Income Tax Returns (ITRs) were filed for the financial year 2022-23 on or before the due date of 31st July. However, a significant number of taxpayers find themselves impatiently awaiting their income tax refunds. The delay in income tax refunds has left many in a state of anticipation, with a limited understanding of the underlying reasons. In this guide, we will discuss the possible reasons for delays and the actions that individuals may need to take.

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.

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.

File ITR

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.

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.

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.

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!

Frequently Asked Questions

Q- Why my ITR status is still under processing?

This means that you have completed your part of filing the return. You need to wait until the CPC (Central Processing Centre) processes the return. Once processed, the status will show as ITR Processed, which means the Tax department has approved your Income Tax Return for that year.

Q- What happens if an income tax refund is above 50,000?

The Income Tax Department may check your refund amount more carefully if it is more than Rs 50,000. This is to make sure that the claim is correct and that no fabrication is involved.

Q- Who can claim a TDS refund?

If you've initially declared less financial investments at the beginning of the financial year but later find that your actual investments exceed those declarations, you could qualify for a TDS refund. This situation typically arises when your employer withholds more taxes than your actual tax liability. In such cases, it's required to file an ITR for a TDS refund.

Q- When is TDS not refundable?

According to the IT rules, you cannot claim a TDS refund if you miss the last date of ITR filing. But there are some exceptions. The IT department gives you an exception under section 119(2)(b) to ask for a TDS refund, exemption, deduction, or any other benefit under the Act by filing the ITR.

Q- What is the status if income tax refund is received?

The status will be ‘refund issued’ when the refund is received.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.