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Tax
refunds are receipts from the Income Tax Department when the
Tax paid by a person exceeds the amount of Tax payable as
per the Rules. In the case of Salaried people it may so happen
that the TDS is in excess of the amount payable by
him either due to miscalculations or an extra deduction not
informed to the employer. Such a person has to file His Return
to claim this benefit. He is also entitled to Interest on
the excess payment.
When
does a refund become due ?
Who
can claim refund ?
- A
person who has paid more tax than the amount of tax
due from him
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A person in whose total income, income of another
person is included under any provision of the Act,
he can claim refund in respect of such income as per
Section 238(1) of the Income Tax Act.
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Where due to death, incapacity, insolvency, liquidation
or other cause, a person is unable to claim or receive
any refund due to him, his legal representative, trustee,
guardian or receiver, as the case may be, can claim
and receive such refund as per Section 238(2) of the
Income Tax Act.
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By tax deductor in cases where tax deducted at source
u/s 195 on payments to non residents is found to be
in excess, subject to approval of Chief Commissioner
of Income tax in terms of Circular no 769 dated 6.8.98.
How
to claim refund ?
In
the normal course, refund is to be claimed in the return
of income itself and no claim by the assessee is necessary
if refund arises on account of reduction in appeal or
any other proceedings, viz., rectification, revision.
Refund is required to be granted by the Assessing Officer
without any specific claim being made where it becomes
due as stated above.
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In
the following cases, however, claim for refund should
be specifically made in prescribed form (Form No.30)
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a.
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Where
a person becomes entitled to claim refund under Section
238(1) or (2) of the Act |
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b.
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Where
the return of income shows income below the taxable
limit and is filed in order to claim refund of taxes paid. |
What
is the time limit for claiming refund ?
One year from the last
day of the assessment year.
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Where
the following conditions are satisfied the Assessing
Officer may admit a belated refund claim subject to
approval of Commissioner/Chief Commissioner of Income
tax :
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a.
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The
refund arises as a result of excess tax deducted at
source/collected at source and payment of advance
tax and the amount does not exceed Rs.1,00,000/-
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b.
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The
returned income is not a loss, where the assessee
claims the benefit of carry forward of the loss;
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c. |
The
refund claim is not supplementary in nature, e.g.,
a claim for additional amount of refund after the
completion of the original assessment for the same
assessment year; and
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d. |
The
income of the assessee is not assessable in the hands
of any other person under any provisions of the Act.
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Refund
on appeal
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Where
refund arises as a result of any order passed in appeal
or other proceedings under the Act, the Assessing
Officer is expected to grant refund without any claim
from the assessee, except in following circumstances
:
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a.
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An
assessment is set aside or canceled and an order of
fresh assessment is directed to be made, the refund,
if any, shall become due only on the making of such
fresh assessment;
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b.
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The
assessment is annulled, the refund shall become due
only of the amount, if any, of the tax paid in excess
of the tax chargeable on the Total income returned
by the assessee.
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Interest
on refunds
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When
refund is of any advance tax (including tax deducted/collected
at source), interest is payable for the period starting
from the first day of the assessment year to the date
of grant of refund. No interest is, however, payable
if the excess payment is less than 10 per cent of
tax determined under Section 143(1) or on regular
assessment. Interest is to be calculated at the rate
of 0.75 per cent per month or part of the month. No interest
is payable for the period for which the proceedings
resulting in the refunds are delayed for reasons attributable
to the assessee (wholly or partly).
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Where
the refund is of tax other than advance tax or tax
deducted at source, the interest will be paid for
the period starting from the date of payment of such
tax or penalty upto the date on which the refund is
granted.
Power
to withhold refund
Where
refund is due as a result of an order under the Act or under
Section 143(1) after a return has been made under section
139 or in response to a notice under Section 142 (1) and
the Assessing Officer is of opinion, having regard to the
fact that
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Notice
has been or is likely to be issued under Section 143(2)
in respect of the return OR |
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The
order is the subject matter of an appeal or further
proceeding OR |
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Any
other proceeding under the Act is pending that the
refund is likely to adversely affect the revenue,
the Assessing Officer may, with the previous
approval of the Chief Commissioner/Commissioner, withhold
the refund till such time as the Chief Commissioner/Commissioner
may determine.
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Set-off
of refunds against tax remaining payable.
If
a refund is found to be due to any person, the tax authorities
may, in lieu of payment of the refunds, set off the amount
to be refunded against the sum payable under the Act by
the person to whom the refund is due after giving written
intimation to such person.
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Get
Refunds directly credited in respective Bank Accounts.
The Income Tax Department has introduced Electronic
Clearance Scheme (ECS) for refunds upto Rs. 25,000/- in cases
of salaried taxpayers filing returns in Form
2E (Naya Saral). This Scheme is available to taxpayers in
12 cities, namely New Delhi, Mumbai, Chennai, Ahmedabad,
Bhubaneshwar, Nagpur, Kanpur, Bangalore, Hyderabad, Patna, Kolkata
and Thiruvanthapuram. Once the return is processed
the refund (if any) will be credited directly to the bank account
indicated in the return of income. Taxpayers wishing to avail
of this Scheme should indicate required bank details on the
return of income. To this end, the Central Board of Direct Taxes
has recently notified modified form 2E for salary returns that
contains columns for providing details of bank accounts. Modified
Form 2E may be downloaded from the website or obtained on fax
or email from Aaykar Sampark Kendra (ASK) by dialing 0124-2438000. |
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