Tuesday 25 June 2013

Tax refunds are not a mystery any more

IT Professional in Delhi had filed tax for the Assessment Year 2011-12 but he is still waiting for the tax refund for the return he filed. He has even cross checked whether he filed the returns in the appropriate manner.


This is not an isolated story; we all have our version of the story and a tale of anxiety and harassments with our hard earned money hanging midway. Taxpaying community, especially individuals are often a frustrated lot when it comes to refund of the taxes paid in advance.


Filing of tax has been a tedious task in itself and getting a refund done is even more cumbersome. The evolution of technology and its adaption in government departments and the increase of skill set, has decreased the problem of refund, however the problem still persists.


Why a tax refund arises?


The key reason why the situation of tax refund arises is due to high rate of interest on tax deductibles at source (TDS) compared to the actual tax payable. It has been seen that sometimes the income calculation of a person is higher when compared to advance tax liability, thereby generating the eligibility of reimbursement.

Further, eligibility comes into picture when the individual doesn't declare his full income to the employer. Medical insurance premiums, housing loans final certificates, interest on educational loans and LTAs are some common examples through which employee can claim tax refunds. Apart from that, Non Resident Indians are also eligible for tax refunds on the interest generated on the NRO account. The tax deducted is equivalent to 30.9 percent.


Eligibility Criterion:


If you are an individual whose income in the year is less than Rs. 2,00,000, then sit back and relax as you are not entitled to file income tax. The eligibility criteria is simple, you will have to calculate your tax liability according to the tax slabs of the Income Tax Act. If the taxes paid during the year were higher than the tax liability, you can get the refund. Please make sure that you have taken into account the deduction and exemptions based on the IT rules. It might also happen that you face a rejection of your refund application because of the wrong calculations of exemptions, therefore cross verify before filing the return.


Refund Status:


Income tax refunds can be checked online and the status can be known by visiting the site of income tax department and also State Bank of India dedicated mail id, which is itro@sbi.co.in. The website of IT department asks for your PAN number and the Assessment Year in which you filed the tax for the purpose of generating the refund status. State Bank of India has been assigned the duty of refunding the claims of tax payers on behalf of the IT department.


Refund Timings:


The difference between timing of offline returns and online returns are wide. The reach of online returns is not so much compared to that of offline returns in India. People are still more comfortable in going to their lawyers and Chartered Accountants for correct filing of the return and submitting the same by hand. The complications of tax calculations sometimes make this a compulsion. However, it must be noted that the refund timing vary. In case of online returns, refund process is faster and takes a maximum of six to seven months but this limit can go up to two years in case of offline returns. Sometimes, the delay is because of the change of addresses or incorrect bank account details.

Offline process is also disadvantageous in the sense that the government style of working sometimes doesn't solve the problem. You will have to visit your Assessing officer along with the documents of your income. But, it is still not guaranteed that your plea will be listened to and the next option for you in that case is to send the details to the chief commissioner of the particular area. In this case, you will have to submit the return copy. If the issue is not resolved for a long time, you can approach a tax ombudsman near you.


Refund timings have been a big issue for the Income Tax Department as many claimants have requested to ease the process and make it faster and user friendly. When you file the return on time with all the necessary documents and guidelines, you want a system that will ensure safety of your reimbursement. In all the cases, sometimes a wait of two years is too much to handle.


Income Tax refund is no longer a mystery that causes sweat beads to appear, all you have to be is bit proactive and be sure of the data entered by you. To have an instance valuation of your income tax, Investment Yogi has an Income Tax Calculator devised at your disposal.





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