Return of Income Taxes

A tax refund may be available in cases where an individual accidentally overpaid taxes. This can occur due to a tax deduction at source or an inaccurate calculation of income tax.

1. Refund of Income Tax – What Is It?

Individuals may end up paying more tax than they are legally required to pay at times. You can claim an income tax refund if your advanced tax or tax deducted at source (TDS) are higher than what you are due. The ITR refund is a way for you to recoup any extra tax you have paid.

By offering online income tax refunds, the government has simplified this process. Usually, after filing your IT returns and verifying them, you will receive an income tax refund within 20-45 days. You can track your income tax refund online if it takes longer than that. If it takes longer, contact the Centralised Processing Centre (CPC).

2. The Calculation of Income Tax Refunds

You can calculate your income tax refund by taking all deductions and exemptions into account when you file your IT returns.

Tax Refund = Tax Paid for the Year – Tax Due for the Year

In case your total tax liability exceeds your ITR refund, you can apply for an ITR refund. The total tax paid for the year includes any advance taxes, TDS, TCS, and self-assessment taxes. In order to calculate income tax refunds, you can use an income tax calculator.

A sample of what may be considered when calculating your income tax refund is as follows:

Income Tax Refund Calculator

Income that is taxable (A)

Rs. 5,00,000

Gross tax liability on above (B)

Rs. 12,875
Less: Foreign tax credit (if applicable)

Rs. 1,000

Net tax liability

Rs. 11,875
Add: Interest on tax liability (Sections 234A, 234B and 234C)


Total tax liability

Rs. 11,875
Less: Taxes paid (C)

Rs. 25,000

Tax Refund

Rs. 13,125

When you file B*C, you will receive a tax refund.

If C*B applies, you will be liable to pay income tax as a substitute for your tax liability.

3. Income Tax Refunds: How Do They Work?

It is very straightforward to process your income tax refund. As soon as you file your returns, verify them electronically or by sending a physical copy of your ITR-V acknowledgment, your refund will be processed. Once your taxes have been verified, the CPC will check if your taxes have been paid more than your tax liability, and begin processing your refund. When the refund process has been completed, your bank account will be credited automatically with the itr filing in india

4. The Eligibility for Itr Refunds

When you pay more taxes than you owe, you are eligible for a refund from the tax authorities. Some reasons a taxpayer may have paid excess taxes are:

  • Self-assessment has resulted in an advance tax payment that exceeds the actual tax owed
  • Tax Deducted at Source (TDS) deductions by employers is higher than tax liabilities
  • The tax payout is higher than the actual tax payable because of an error in the tax calculation
  • Foreign income taxation

Getting a refund of excess taxes is dependent on filing a correct ITR and having it verified.

5. Making a Claim for a Refund of Income Taxes

To claim an income tax refund, you simply need to file your returns. There is no separate process for claiming an ITR refund. It is all that matters if you are eligible to claim a tax refund, whether it is a TDS refund, a double taxation refund, or any other refund. Just make sure you file your taxes correctly and verify them.

  • If you are an individual, the last day to file ITR for the tax year is the 31st of July.
  • Ensure all the details on the ITR form, such as Form 16, Form 24AS, TDS slips from bank interest, self-assessment tax paid, etc., are accurate to be eligible for a refund.
  • Following the collection of all the necessary information, you should check whether a refund is possible.
  • The amount of refund you qualify for will help you track the credit you are supposed to receive.
  • Ensure that you verify your ITR returns as soon as you file them. ITR filing verification can be done online or in person. You can verify your ITR filing electronically via an OTP generated from your Aadhar or through an EVC sent to your registered mobile number. Within 120 days of filing your ITR returns, you can physically verify your filing by sending the CPC a signed copy of the ITR Form V acknowledgment.

If it takes longer than 45 days for the refund to reach your bank account, you should speak with the CPC about why the refund is being held up.

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