Delay in Income Tax Refund - Causes and Action Plans

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Delay in Income Tax Refund - Causes and Action Plans

There arise certain situations in the income tax whereby the assessees are allowed a refund of income tax from the government. However, it does not happen every time that the assessees receive the refund on time from the government. There are many situations whereby there is a delay in receipt of income tax refund, largely for no fault of the assessees. If your refund is also delayed, then know the reasons behind the same and what you can do in such situations.

First, let us find out why is there a situation of income tax refund!

Reasons for Income Tax Refund

Following are some of the major reasons giving rise to income tax refunds:

  1. Firstly, one of the prime reasons for the refund in income tax is TDS. An increase in salary or the income of the assessees have surely increased the lifestyle of many, but also it has increased the tax on their incomes.
  2. The collection of tax by the government in form of TDS, TCS, and advance tax gets credited to the government before the final calculation of tax and filing of IT return. Thus, sometimes the final calculation of tax is different from that credited to the government

There can be two cases here:

  • The final tax is more, in this case, tax is to be paid to the govt (along with interest) or
  • The amount paid as tax to the government is more. In this case, the government refunds the extra credit back to the assessee. This is what we call an Income tax refund.

Common Reasons for Such Delay in Income Tax Refund

Following are some of the most prominent reasons for delay in income tax refund for the assessee:

  1. Refunds are not getting processed
  2. The calculations submitted by the assessee in IT return are less than what the government has calculated thereby leading to outstanding demand.
  3. Late filing of income tax return i.e., filing near or at the due date
  4. Wrong calculation of TDS or TDS mismatch by the employer
  5. IT returns filed on paper are processed slower than that filed online (Thus, it is recommended to switch to online filing).
  6. Wrong banking details (e.g., IFSC code or the bank account number) with the income tax department
  7. Incomplete or lack of supporting documents (e.g., incomplete required annexure/table) in an income tax return filed
  8. Many a time, the amount of the refund also decides the timing of receipt of the refund. Smaller amounts or refunds are usually processed faster than the bigger ones
  9. You have sent your ITR-V (income tax return acknowledgement) to CPC-Bengaluru but there was a delay in the delivery of the same
  10. Delay in e-verification of your income tax return

What Can Be Done to Avoid Delay in Receiving Income Tax Refund

If you have an income tax refund pending, then here are some steps that you should perform after filing your IT return-

  1. Check whether the income tax return is showing “under processing” status in the portal. To check the e-filing refund status, login to the IT portal.
  2. Navigate to ‘e-File’ >> Income Tax Returns >> View Filed Returns. Go to the relevant AY and check the ITR status.
  3. Further, check whether you have received a PDF (u/s 143) in your mailbox. This intimation is generated after the refund is processed and it states whether there is a refund of tax arising or whether any demand is outstanding. If the PDF of section 143 does not get mailed to your email-ID, then you should contact the central processing center (Bangalore) (1800 103 0025) and inform them that you have not received the same.
  4. After these steps, you can refer to the below table according to the reason of your delayed refund.

Reasons / Situation for Delayed Refund

What to Do?

Tax calculated by the IT department is more than what you calculated in your IT Return

In this case, you will get a notice regarding the incorrect calculation of income, consequent taxes and outstanding amount (if any). Therefore, you should recalculate your income and consequent tax liability and go through all the documents for its support.
Now there are 2 possibilities:

  1. If you think the tax calculation of the IT department is not correct, you can proceed to file a rectification return as per Section 139(4) in order to support your claim.
  • If the tax calculation of the IT department is correct, then you should discharge the tax liability as raised by the income tax department within the time limit as specified in the notice.

You did not include some of the deductions you were eligible for in your IT return.

You should file a revised return, therein including the deduction you missed to include in your IT Return.

Details of the bank account (e.g., IFSC code, etc.) with the IT department is incorrect or you have not updated them with the new bank account details.

In this case, you may raise a grievance directly from the portal.

After correcting the details, there might be a situation whereby the income tax department may require you to raise the refund reissue request. (Such refund reissue requests can be filed only if the portal shows the option for that. No such request can be filed until then.

 

Following are the steps for raising the Refund re-issue request:

Login to the portal >> Dashboard >> Services >> Refund Reissue >> Create refund reissue request.


Alternatively, the IT department may ask you to provide your latest bank details along with any other additional information as may be required. The information shall be mailed directly on their e-mail ID - efilingwebmanager@incometax.gov.in. In such case, you shall attach the following information: -

  • Helpdesk Ticket Number (grievance acknowledgement number).
  • PAN card scanned copy
  • Contact Details (Name, Contact Number, DOB/DOI)
  • Scanned copy of any one of the Government identity proofs such as:
  • Passport
  • Aadhaar card 
  • Voter Card
  • Error message (if any, on grievance site) screenshot

If the PDF of section 143 shows the refund is processed, but you still have not received it in your bank 

State Bank of India is designated as a refund banker by the income tax government. In such a case, you can ask them about the current status of your refund processing. (Contact No.: 1800 425 9760)

Other reasons (wherein your refund request is shown as “under process”)

Make sure that you have e-verified your income tax return. If not, then you should download, print and sign the return acknowledgement (ITR-V) and send it to the Central Processing Centre (CPC) - Bengaluru within 120 days from the date of e-filing. 

If you have not done so, then you can file a revised return e-verify it or send the new ITR-V acknowledgement to CPC, Bengaluru. Also, revisit the e-filing portal and check whether the bank account details are validated.

 

In a Nutshell

Following were the reasons for delay in your income tax refund and the ways you can tackle the same. However, the government also pays the interest on delay in refund of income tax if the delay is not due to the fault of the assessees. However, it is always advisable to contact your e-Auditors to know the problem and the solution before taking further steps.

 


Author : Dipen

Date     : 21-Jul-2022


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