Declaration of proposed investments is an activity that organisations ask their employees to do at the beginning of the financial year. Individuals tend to treat this exercise with little thought, not realising its impact. So many a time, the employer ends up deducting more TDS than needed. This will come to light at the time of filing your returns, warranting a tax refund.
What is a tax refund?
A tax refund is a claim by tax payers from the Income tax authorities, for paying taxes in excess.
When can you claim the refund?
Tax refund can be claimed within one year of the last day of the assessment year. For AY2010-11, tax refunds can be claimed before March 31, 2012.
How to claim refund?
The tax payer can claim refund at the time of filing your returns. If for some reason you were not able to file for refund at the time of filing, you can file a revised return of income stating the amount of refund within the specified time.
How will you receive the refund?
The refund can either come in the form of a cheque directly to the address furnished by you while filing your tax returns. Else, if details are provided pertaining to the bank account such as bank name, account number and MICR code, the tax refund can also be directly credited to your account.
Within what time should you receive tax refunds?
Tax refunds should actually come within a year of filing returns. However, the average time taken is around two years from the date of filing returns which is a marked improvement from the earlier time frame of three years plus.
Tax refunds tend to dry up during January to March, as income-tax authorities need to meet their tax collection targets, so post this period is when the refunds are usually received.
What should I do if I have not received my tax refund for over a year?
The income-tax authority has come up with an online facility for tracking the status of your tax refund. This is currently available in six cities and is being extended nationwide, in a phased manner.
You need to log on to the NSDL website, enter your PAN number and the year, for which you need to get a refund to figure out your status.
Those who do not have this access yet need to follow the steps outlined below.
n Write a letter to the concerned income-tax assessing officer providing details such as the amount of refund, the PAN, the AY for which the refund has not been received, the date of filing returns and the acknowledgement number that you would have received while filing returns. Make sure you receive an acknowledgement for the letter.
n If you don’t receive a response for a month, you may write to the jurisdictional chief commissioner of the income-tax with a copy to the assessing income-tax officer pointing out that you have not received refunds and have not received any correspondence on the subject in spite of a reminder. Enclose the copies of your earlier communication. Make sure you get an acknowledgement for the letter.
n If you don’t receive a response after a month of sending the above letter, you then need to take up the matter with the income-tax ombudsman. You need to send a letter to the ombudsman giving details of the refund due to you, and enclose your correspondence with the Income tax authorities. In most cases, you should receive your refund without any hassle because the ombudsman is very powerful and any communication from here is binding on the income-tax officials. Only in complicated cases, both the tax payer and assessing officer will be called for a meeting.
The taxpayer can also file an application under Right to Information Act, 2005, to find out the status and to track his tax refund.
In order to avoid finding yourself in a situation where you need to file for a tax refund, make sure you provide appropriate information to your employer in time so that he does not deduct taxes in excess of what is required.
(The writer is CEO of bankbazaar.com. He can be contacted at adhil.shetty@
bankbazaar.com)