Taxes can be paid in different ways in India, including advance tax, self-assessment tax, tax deducted at source (TDS), foreign tax credit, etc. If you realize you have paid more tax than your actual tax liabilities at the end of the financial year, you may be able to get a tax refund.
How do income tax refunds work?
- Online income tax calculators allow you to calculate your tax liability. However, sometimes it is possible that more tax is deducted at source from your salary or other income, or that you have miscalculated and paid a higher advance tax.
- The Income Tax Department refunds excess income tax paid over what you have to pay. This amount is called a refund.
- According to a calculator, one financial year you owe 75,000 dollars in taxes. Despite your efforts, you failed to inform your employer of your tax-saving investments in time. As a result, your company deducted taxes from your earnings as TDS, resulting in a tax bill of *1 lakh.
- Then, according to Section 237 of the Income Tax Act, 1961, you may claim a refund of * (1,00,000 – 75,000) = ₹ 25,000.
- There is no tax due on the refund you receive since it is not considered e filing of income tax return
How To Qualify for a Tax Refund
Tax refunds may be available in the following situations:
- Your salary has been taxed too much (TDS)
- The amount of tax (TDS) deducted exceeds the interest on bank deposits, securities, or debentures
- Self-assessment advance tax paid exceeds deductions and exemptions payable
- Income earned in a foreign country is taxed in both that country and India
- There are tax-saving investments you have yet to declare
If You Owe Income Taxes (ITRS), You Must File Them.
In order to qualify for a tax refund, you must submit your ITR form. The only way to claim a refund is through your ITR form. Ensure you provide proof supporting the instruments you use to claim your refund. In addition to house rent allowances, life insurance premiums, health insurance, mutual funds, and home loans, there are a number of other tax-saving tools available
Your return must also be verified within 120 days of filing. You can verify your ITR electronically by using your Aadhaar Number OTP or EVC generated from your bank account, or you can get your ITR physically verified. The Central Processing Centre requires you to send your signed ITR-V to it.
You will receive your refund from the tax department after processing your ITR.
Frequently Asked Questions
- Is there a fee for checking the status of my income tax refund?You will not be charged for checking the status of your income tax refund.
- Do I have to file a tax return to receive a refund?You must file your income tax return for the assessment year if you want to claim a refund.
- What Are the Best Ways to Save Income Tax?
- Tax Return or Income Tax Return – Itr
- How to Save Income Tax Under Sections 80D, 80DDB, 80DD and 80U?