Claim Income Tax Refund: A Step by Step Guide

An Income Tax Refund is always great to receive. It may look like a bonus being given to us by the government. But the fact is that it was your money to begin with, overpaid by you to the government!

While tax rates are fixed, people often pay excess taxes for various reasons. Sometimes, advance taxes are paid in anticipation of income which may not materialise. Tax is also deducted at source on investments such as Fixed Deposits, or for salary income, and it should be reclaimed if it’s in excess of actual dues. Sometimes, we may even fail to make investment declarations, which results in excess taxes being paid, and these need to be reclaimed too.

While many of us are familiar with the tax-filing process, many may not be aware of the process by which overpaid taxes are reclaimed. The reason is that we rarely get into the situation of claiming a refund, as our taxes are filed by our employers who adjust the Tax Deducted at Source (TDS) in a manner that reduces our tax liability at the end of the financial year to zero, leaving us nothing further to pay or reclaim.

In this article, we will outline the process to claim income tax refunds.

1. Know the returns filing date

Income tax refunds can be claimed while filing your income tax returns for the financial year. The deadline for filing your returns is usually July 31 of the financial year following the financial year for which you are filing your returns. This is called the Assessment Year. For example, for Financial Year 2016-17 which is from April 1, 2016 to March 31, 2017, the Assessment Year is 2017-18 which extends from April 1, 2017 to March 31, 2018. The deadline for filing returns for FY2016-17 is July 31, 2017. Try to avoid last minute rush and file your returns well before the deadline in order to avoid hassles.

2. Keep all necessary documentation handy

It is recommended to keep all necessary documents handy before you commence your returns filing. These documents include bank statements, salary statements, business income statements (if you own or run a business), Form 16 from your employer or banks where you have made investment, interest paid certificates, investment proofs and related documentation, relevant insurance documents, 26AS tax credit extract, etc.

3. File the income tax return

Next, you have to file the income tax return. This is done by filling a form (ITR – 1 or ITR – 4). The form contains all the necessary field such as name, address, your total income, taxable income, TDS if any, total due, refund due, etc. This form contains all your financial information for the year. You can either ask a Chartered Accountant to file your taxes or you can do it yourself, since the form is self-explanatory.

4. Identify the refund amount

Once you submit the form, you can see the refund, if any, in the refund column. This occurs if the taxes you paid are more than your actual liability. To identify this amount, first you need to click on the ‘Validate’ button on the ‘Taxes paid and verification’ sheet. Note the amount of the refund and retain a copy of the ITR form generated.

5. Send the form to the income tax office

If the refund column shows a figure, it means you have paid more taxes than your actual tax liability. To claim the refund, you have to take the print out of the form and sign in the designated place. The form contains the address of the income tax office where you have to send it. It specifically mentions that you send it through speed post or ordinary post. So enclose the signed form in an envelope and send to the mentioned address.

6. Finally, wait for the refund to get processed

As soon as the Income Tax Department receives the signed form, it intimates you through SMS. The Income Tax Department may verify the figure if they find a discrepancy. Once they are satisfied, they process the application for refund of extra taxes paid. All the events are communicated to you through SMS and/or email. The refund process can take anywhere from a month to four months.

Follow these steps and get your refund on time.