WHY IS YOUR INCOME TAX REFUND DELAYED AND HOW YOU CAN EXPEDITE THE PROCESS?

INTRODUCTION-

Whenever a tax amount is paid over and above the actual amount of tax payable, that’s when an income tax refund comes into role play. In that scenario, a person will be eligible for a refund of tax.  A taxpayer can at any time check his Income Tax Refund Status which is processed by the Income Tax Authorities (through income tax website)

Defining Income Tax Refund Status

Income Tax Department will return any excess amount of tax paid by a taxpayer in a Financial Year. The refund can be claimed under Section 237 of the Income Tax Act, 1961.

Over Rs. 1,18,324 crore refund has been bestowed to more than 33.54 lakh Taxpayers between April 1 to September 29, 2020, by the Central Board of Direct Taxes- Report by the Income Tax Department.

A refund of Rs 32,230 crore was issued in 31, 75, 358 cases and a refund for the corporate tax of Rs.86, 094 crore has been issued in 1, 78, 540 cases- The Statements Report

The Central Board of Direct Taxes is a body of personal income tax and corporate tax.

The Central Government in view of the pandemic situation has professed their concern towards refunding the taxpayers on time. 

What to do when Income Tax Refund is struck? The following steps are to be followed-

Sometimes, Taxpayers who pay their due returns on time, unfortunately, have their income tax refunds pending. Several complaints about the delay of refunds are filed in the Income Tax Department. The main challenge for any taxpayer in getting their refunds is that it is a lengthy and time-consuming process. 

Once, a taxpayer filed for his Income Tax Return, it is the responsibility of the Income Tax Department to verify the information and in return, if any record of excess tax paid is found then they should automatically process the refund. 

The cheque for a refund should be sent to the assessee’s address within four months or the amount can be credited to his bank account through an electronic clearing system. Both the options are available to the Taxpayer.

Two of the major criteria that lead to such delay are the wrong computation of tax or the incorrect address of the receiver. In order to avoid such technical glitches, taxpayers are advised to use the old method of writing to the registered office via a registered post. 

It is advised to go to the tax department or NSDL-TIN (National Securities Depository Limited-Tax Information Network’s website) or write use the help of the help desk of the State Bank of India.

Things advised incorporating-

• In case of a defective Income Tax Return filing from the taxpayer’s side has to be first solved by writing a rectification letter. Once the issue is cleared, the pending refund can be fetched.

• If there are no such defects, a taxpayer can write a letter along with the copies of the returns to the Assessing Officer and informing him of all the details. 

• If there is no response in 10 days, it is advised to write another letter but to the Additional Commissioner of Income Tax attaching the earlier letter written to the Assessing Officer.

• If there are no above two responses it is required to write a letter to the Grievances Department with copies of the letter written to both Assessing Officer and Additional Commissioner of Income Tax.

• In case of no help, a visit to the officers won’t harm anyone rather would speed up the procedure. 

Usually, it takes a month for such cases to be resolved and if that doesn’t happen one is advised to visit the nearest I-T Ombudsman’s Office and ask the Ombudsman to write a letter directly to the I-T Commissioner seeking details of the pending case. This measure may show its result in a period of 1 to 3 months. 

List of reasons for such delays in Income Tax Refund

• TDS Data Miscalculation- If TDS data doesn’t match the data with the Income Tax department, the refunds will be delayed and laid back. It is important for the TDS details filed online to be checked and well-verified before submitting the form.

• Mistakes in Address- Delays in refunds take place majorly when the taxpayers give a wrong address.

• Bank details missed- It is important to give accurate bank details - account number and its MICR code for easy direct credit of refunds and failure to do so will get the refund delayed and struck.

• Failure to submit a hard copy of Income Tax Return on time- Refunds won’t reach the taxpayer if he fails to file ITR on time.

• Innumerable TDS entries- If TDS entries per assessment year are up to 70-80 entries to refund it takes longer and is usually delayed. 

How to check the status of refund-

1. Log in to the Electronic-Filing website with your registered User ID, Password, Date of Birth / Date of Incorporation, and Captcha.

2. Select the option “My Account” 

3. Select the option “Refund or Demand Status”.

4. The below details will be shown-.

• Means of Payment
• Status
• Assessment Year
• Reason for Failure in Refund (if any)

Procedure to Raise Refund Re-Issue Request-

1. Log in to 'Electronic-Filing' Portal - www.incometaxindiaefiling.gov.in

2. Click on the 'My Account' menu and click the 'Service Request' link.

3. Click “Request type” as “New request”

 4. Select “Request category as – refund Re-issue”

5. Click “Submit”

6. The following will be displayed- PAN, Return Type, Assessment Year, No communication Reference Number, Reason for failure to Refund, and its Response.

7. Required to click “Submit” located under the “Response” column. All the pre-validated bank accounts with status validated and EVC will be displayed. 

8. Selection of bank account is required to which tax refund will be credited. Click “Continue”. The following will be displayed- Bank Account Number, IFSC, Bank Name, and Account Type of the taxpayer and to verify the above.

9. Click “OK” to continue if sure about the details being correct and soon after those options for e-verification will appear in the dialogue box. Choose the appropriate mode of electronic verification. Enter an Electronic Verification Code or Aadhaar OTP as it is important to proceed with the request submission.

10. With the profile it is important to register “A Digital Signature”. The signature file can be generated by downloading the “DSC Management Utility”. The signature file can later be uploaded to proceed with the submission.

11. In the end, a “Success” message will be displayed to confirm the Refund Re-Issue Request Submission.

Awareness Against Fake Tax Refund Emails-

It has been urged by the Income Tax Department to the taxpayers to be aware of the ongoing frauds in this technology era. Sometimes hackers sent such messages to fraud innocent taxpayers. They replicate messages which the Income Tax Department sent to their taxpayers. The fraudsters are taking advantage of the pandemic situation and create clickbait messages and scam innocent taxpayers. 

Recently cautionary messages urging the taxpayers to not click on fake links have been forwarded by the Reserve Bank of India and Insurance Regulatory and Development Authority of India. Those fake links are sent through SMS.

For cautionary measure the official links of the Tax Department Website:-

• https://www.incometaxindia.gov.in and

• https://www.incometaxindiaefiling.gov.in/home.

Conclusion:

It is important to take quick action in case your refund has been delayed due to any reasons listed above, since delayed action may cost the loss of refund to the assesses. Thus, with the right approach and good professional advice you ensure that you get what is due to you by the income tax department.