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INCOME TAX REFUND AND ISSUES

Whether being an individual or a business, one must have come across the term income tax refund paid by the income tax department.

A tax refund or tax rebate is a payment made to the taxpayer when they pay more tax than they owe.

It could be in the form of advance tax, self-assessment tax, tax deducted at source, foreign tax credit, etc.

 One can claim a tax refund by simply filing the return of income in the usual manner.

However, it is to be ensured that one’s return must be electronically verified through Aadhar number OTP, EVC generated through a bank account, or physically verified by posting the signed ITR-V form to the Centralised Processing Centre (CPC) within 120 days of filing the return.

Once the returns are processed by CPC at the primary level for numeric errors etc., the refund will be initiated to the taxpayer.

If verification of ITR itself is delayed, processing and issue of refund too will be delayed.

Therefore, it is always advisable to verify your return before the period of 120 days' end, to get an earlier refund.

A tax refund is usually processed within a month of filing the ITR. After the processing of a refund is completed by the Centralised Processing Centre, the refunds are issued within 20 to 45 days.

However, tax refunds are not always on time, it could be delayed due to several reasons.

Below mentioned are the common reasons for income tax refund delay:

 

1. Due to manually filing

5. If you have filed your returns manually and then mailed the acknowledgment to the IT department, Bangalore, you will receive the refund late than those who have filed electronically.
5. However, individuals who have income above Rs. 5 lakh should file their tax returns online.

2. Old bank account number

5. One of the more common reasons for the delay in refunds when taxpayers forget to update their latest account number with the tax department following a change in jobs or salary accounts.
5. If the income tax department is not updated with the latest bank account, there may be a delay in processing your income tax refund.

3. Missing bank account details

5. You are supposed to give your bank account number and its MICR and IFSC code for direct credit of refunds.
5. If there is an error, your refund gets stuck.

4. Wrong address

5. If the correct address is not updated, the refund is issued through cheque will be returned to CPC, if and if there is a change in mailing address.

5. Incorrect deductions

5. If you have missed to include any deductions like those provided under sections 80c & 80D of the Income Tax Act, or any other sections that you wish to claim deduction under, there could be a delay & you may not be eligible for the same.
5.  
5. Check the return form to ensure that all deductions that you wish to claim are in place.

6. Late filing of taxes

5. For obvious reasons, if there has been a delay in filing taxes for a particular year from your side, a delay in getting your income tax refund can be expected.
5. If you have filed your tax returns quite close to the last date, there can be a delay due to rush at the peak time and the tax department may take time to process your request.

7. Tax fraud

5. Unusual circumstances like say trying to commit tax fraud or evading taxes or any other criminally punishable offense could result in a delayed refund, also further prosecution.

8. Mistakes in TDS/TCS data

5. If the TDS details in your form do not match the data with the Income Tax Department, expect your refund to be put on the backburner.
5. Verify the TDS details online before submitting the form.

9. Need for additional documentation

5. This could be one of the common reasons for not getting tax refunds, which may be required to support the claim or pending past demands or maybe for the operational issue.

Note-It is always advisable to keep a check if there is any communication from the IT department on the registered email id or e-filing account regarding the reason for not getting a refund.

As you cannot raise the refund re-issue request until the reason for rejection is reflected on the e-filing website.

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