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Dummy's guide to tax refunds
Tax refunds take their own sweet time to arrive. But there are ways you can ensure that you are not a tax refund case. Just keep a few subtle things in mind whilst filing your taxes and submitting your investment proofs with your company.
Your tax proofs time is long gone. Companies have started issuing Form 16s and there is another tax filing fast approaching. You would by now have a fair idea, if you were a tax refund case.
Although it may be imprudent to look at it from a retrospective view, it may help this time round.
Don't miss claiming your exemption / deduction.
You have host of opportunities to save taxes. If you have utilised all of them, then simply provide the proofs to the company. Don't procrastinate, this will only create complications and you will have to run around for your refund from IT department.
If you have missed submitting your proofs, you can do so whilst filing your tax.
When does a tax refund arise?'
There are a few scenarios when tax refunds could arise, some of them are listed below:
Failed submitting exemptions / deduction proofs
- Missed claiming tax benefits
- Home loan certificate was not submitted to the company
- Your Form 16 reflects a refund. This could happen if you declared your tax savings a tad too late when the company has already initiated the tax deduction based on their earlier records
Missed exemptions / deductions
Missing the deadline with your company can prove to be tedious. You will have to do the computation -- attach the proofs after inclusion of the relevant exemptions / deviations, the credit of such refunds could take anywhere between 8-10 months; in some cases, assessees have been battling over it for the past 2 to 3 years.
Deadline for filing tax refund cases
Taxfiling has to be done ideally prior to 31st July of the financial year irrespective of whether one is a tax payable, zero tax or tax refund case.
However, if one has missed the above deadline, the refund should be claimed within one year from the last day of assessment year. For example, if one wants to claim refund for the assessment year 2009-10 than the last date to claim refund will be 31st March 2011.
Any filing done post this will have to support itself with a valid reasoning on such delay, whenever the IT department chooses to send a notice to the assessee.
Can you adjust your earlier refund if you do not get it?
The answer is 'NO'. However, there has been a new provision introduced by the IT department which indicates that one can adjust against Income Tax for FBT (fringe benefit tax) paid, incase, you have made any advance FBT paid post its abolishment. As one might already know FBT has been abolished from assessment year 2010-11. However, many assessees have paid advance tax in respect of FBT during this current financial year 2009-10 for assessment year 2010-11.
So CBDT (Central Board of Direct Taxes) eventually issued this circular for adjustment of advance FBT against income tax /advance tax for the assessment year.
Refunds: Keep these points in mind
For faster processing of refunds, details of bank account like the bank, branch and MICR code (a nine-digit number on the bottom of the bank cheque) should be clearly mentioned in the tax return form.
Refunds are being sent in following two modes:
RTGS / NECS: To enable credit of refund directly to the bank account, taxpayer's bank A/c (at least 10 digits), MICR code of bank branch and correct communication address is mandatory.
Paper cheque: Bank account number, correct address is mandatory
Taxpayers can view status of refund 10 days after their refund has been sent by the Assessing Officer to your banker by entering 'PAN' and 'Assessment Year' on the website: https://tin.tin.nsdl.com/oltas/refundstatuslogin.html
The IT Department plans to set up six large central return processing centres in different parts of the country. All the returns captured in digital format will be processed at these centers.
Hope this note makes your life easier to ensure that you get your refund on time or best go for the best option Simply avoid it by planning ahead of time!
Anil Rego is the founder and CEO of Right Horizons , an investment advisory and wealth management firm that focuses on providing financial solutions that are specific to customer needs.