Taxpayers Must Be Aware Of The Income Tax Refund Rules
Income Tax Refund Rules- To be qualified for a refund, one must ensure that the excess tax paid is shown on Form No. 26AS. The Income Tax Return (ITR) filing deadline for the fiscal year 2022–2023 is July 31, 2023. If the taxpayer filed an ITR, the Income Tax Department will provide them a refund if they paid too much tax during the year. However, there are a few guidelines that one should be aware of while applying for a tax refund, as this article explains.
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Eligibility for a refund of income taxes
Income Tax Refund Rules, One may receive a tax refund if the amount of tax paid in advance on the basis of self-assessment is greater than the amount of tax due under the regular assessment. Taxes deducted at (TDS), taxes collected at (TCS), and taxes paid by the taxpayer himself, such as advance tax & self-assessment tax, are all included in the taxes paid by the taxpayer or on behalf of the taxpayer.
When completing the ITR, one should make sure that the excess tax paid is represented in Form No. 26AS and that all incomes are disclosed in the Annual Information Statement (AIS). Additionally, as reimbursements will be credited to the user’s bank account. It is important to make sure that their bank account information is up to date on the official e-filing page.
Interest on a refund of income taxes
In cases when the refund amount is 10% or more of the total tax paid. Interest is paid by the income tax department. Simple interest is paid on the amount of the tax refund under Section 244A of the Income Tax Act at a rate of 0.5% every month, or part of a month. If the return is submitted on or before the due date. Interest is computed from April 1 of the applicable assessment year until the date the refund is issued. The interest on the refund amount is calculated from the date the ITR is furnished to the date the refund is given in cases of late ITR filing.
Refunds of income taxes are not taxable
The amount of an income tax refund is not taxable because it is not regarded as income. The interest earned above the tax refund, however, is considered income. As a result, it is subject to income tax based on the relevant tax slab.
If you didn’t file an ITR by the deadline, can you still request a tax refund?
Circular No. 9/2015 states that taxpayers who fail to submit their ITR by the deadline may still be eligible for a refund for up to six assessment years if certain requirements are met. To do this, one must first submit a request for a delay pardon. After the delay has been excused. ITRs for the previous six years must be submitted electronically with a reference to the ruling providing the exception.
Refund adjusted for outstanding demands
Tax authorities may offset the taxpayer’s refund amount against such unpaid taxes under Section 245 of the Income Tax Act. The income tax division may offset any unpaid demand from prior years with the amount of the refund that is payable. It must, however, give notice before making such a modification. A taxpayer may assert that their refund has been incorrectly adjusted by filing a complaint on the income tax portal.
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