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Talk about income tax refunds and you’ll find six of 10 people complaining about their share pending for long. There are several reasons for this; growing number of taxpayers, technical problems at the department, and many times, the department is ‘slow at work’.
It works like this. Once a return is filed, the income tax (I-T) department verifies the information and processes it, and refunds any excess paid. Ideally, a refund cheque is supposed to reach your mailing address in four months or can be credited to your bank account through the electronic clearing system or ECS.
But, even in those cities, ECS has not helped much. Neither has the interest penalty of six per cent. As a result, the four-month period stretches to years.
Reasons for the delay
|INCORRECT TDS DETAILS: If the TDS details in your form do not match the data with the income tax department, expect your refund to get delayed. Verify the TDS details online before sending the form
MANY TDS ENTRIES: If there are lots of TDS entries (some taxpayers can have up to 70-80 entries), your assessment might take a little longer. Obviously, the refund also gets delayed
WRONG TAN: If you are a salaried individual or earn interest income, not providing TAN can also delay your refund. It is advised to provide your employer or bank’s TAN
WRONG MAILING ADDRESS: Though direct credit of refunds has removed this problem to a large extent, there are some who give incorrect addresses and then wait for refunds
INSUFFICIENT BANK DETAILS: You are supposed to give your bank account number and its MICR code for direct credit of refunds. If there is an error, your refund gets stuck
NOT SUBMITTED ITR-V: The return is not filed until the ITR V reaches the CPC in Bangalore. Don’t expect any refund if the ITR-V has not been filed
|Here's what you can do|
Says Amarpal Chadha, tax partner at Ernst & Young, “Income tax refund can be delayed if the amount you claim as taxes paid does not match the government’s record. Many presume the online record (Form 26 AS as compared to Form 16/16A) is correct, which may not be the case always. Hence, it is advisable to always take a copy of your Form 26 AS and compare it with your Form 16/ 16A.”
Also as a caution, always check the permanent account number (PAN) you provided at the time of filing returns and other personal details (name, assessment year, and so on) which, if written wrongly, can add to your refund woes.
If you give wrong addresses, you’ll have to wait for refunds. And, most don’t update the address of correspondence provided at the time of applying for PAN. The I-T department is supposed to credit refunds directly to your bank account in case the amount is less than Rs 25,000. However, often, even for higher amounts you may just land a cheque to the mailing address given at the time of applying for PAN. So, update your change in address regularly. If possible provide your permanent address, if you live on rent.
You are supposed to give your bank account number and its MICR code for direct credit of refunds. Most taxpayers don’t provide the right MICR code, which stands for magnetic ink character recognition, and their refund gets stuck.
Says Saakar Yadav of myITreturn.com, “If you have an account with a co-operative bank, do remember to say No to the option (at the time of filing returns) where you are asked whether your bank has ECS facility or no.”
Importantly, from this year onwards you will have to furnish details of tax deducted at source (TDS). If the details in your form don’t match the one with the I-T department, your refund will not be addressed immediately.
This is how it works. “Anybody issuing a TDS certificate, except salary TDS, should download Form 16A from the National Securities Depository’s (NSDL) website and give it to the taxpayer. For instance, your bank will give it to you. On the right hand top corner you’ll find the six-digit TDS certificate number,” says Yadav. Verify the TDS details online before sending the form.
The details can mismatch due to various reasons, such as the TDS deductor writing wrong TDS number or not sending the tax deducted, leading to a delay in your tax refund.
Those having a salary account or bank interest income should also provide Tax deduction Account Number (TAN), mandatory for assessees liable to deduct TDS. Many don’t provide one or give a wrong number of their employer or bank or any other institutions paying them an income.
The return is considered not filed until the Income Tax Returns Verification (ITR-V) reaches the department’s Bangalore office within 120 days of filing returns online.
Then, your refunds can be delayed if it is picked up for scrutiny and there is no one particular reason for it. Refund arising on revised returns will also not be easy to get. Or, if on the back of mismatched assets, your refunds can be delayed. There may be cases where you receive the cheque, but it has expired.
Getting your refund is a lengthy and time-consuming process. You can take it up with the Assessing Officer or Additional Commissioner of Income Tax (A-CIT), which should be sorted in a month or three.