Income Tax Refund Status: How to Check and Track?

Filing tax returns can feel daunting, especially for new taxpayers. In the past, waiting for your tax refund seemed to take forever. However, as per government records, the average processing time for tax refunds is now reduced to 10 days compared to 93 days in 2013-14. So, how do you check your income tax refund status and income tax refund eligibility? Get answers to these questions and more details related to Income Tax Refunds here.

What is an Income Tax Refund?

The Income Tax Act, 1961 requires taxpayers (individual and business entities) to pay taxes in the form of direct or indirect taxes. While indirect taxes are collected on the goods and services manufactured or sold, direct taxes are charged on the assessee's income or profits. Direct taxes are to be paid in the form of TDS (Tax Deducted at Source), TCS (Tax Collected at Source), Self-Assessment Tax, and Advance Tax. However, these total taxes paid during any financial year can differ from the actual tax liability which can be less due to various tax exemptions and deductions available under the Income Tax Act. This situation can make taxpayers eligible for a tax refund, i.e., an excess amount paid over the final tax liability. 

Once the assessment of the ITR is completed, any refund due is issued and credited to the taxpayer’s pre-validated bank account within 15-45 days of filing the Income Tax Return duly. 

Eligibility Criteria for Income Tax Refund

As per the Income Tax Act, 1961, a taxpayer is eligible for an income tax refund in the following cases. 

• Filing the ITR within the due dates: The primary requirement to be eligible for a tax refund is filing the Income Tax Return accurately within the due dates. This can lead to a hassle-free refund process for the Department as well as the assessee. 

• Excess Tax Paid: A taxpayer is eligible for a tax refund if the total tax paid during a financial year is more than the actual tax liability for the said year. 

• Investment Deductions: The Income Tax Act, 1961 allows taxpayers to get deductions from their taxable income on account of eligible investments or payments, such as retirement funds, life insurance, housing loans, etc. These deductions reduce the net taxable income and therefore the overall tax liability for the financial year, leading to tax refunds. 

• Multiple Sources of Income: The Income Tax Act mandates the tax to be deducted at source from the eligible income before such income is credited to the taxpayer’s account. However, this TDS is deducted at different rates for different classes of income such as salary, freelance work, rental income, etc. This can lead to a discrepancy in the actual tax liability computed at the time of filing the tax return and the tax actually paid in the form of TDS which can result in a tax refund. 

• Foreign Income: Taxpayers earning income from foreign sources are liable to pay taxes in such foreign countries as well as in India based on their residential status. This can lead to a case of double taxation on the same income and the Income Tax Act under the Double Taxation Avoidance Agreement (DTAA) prevents such cases. Taxpayers can therefore be eligible for tax refunds as per the provisions of the Double Taxation Avoidance Agreement (DTAA).

How to Know Income Tax Refund Status Online?

Once the ITR is duly processed, an intimation is sent to the taxpayers confirming the additional tax demand or the eligible refund as the case may be. Taxpayers can subsequently check the status of their tax refund online through any of the following modes.  

Checking IT refund status through the NSDL website

The steps for checking the IT refund status through the NSDL portal are - 

• Visit the NSDL Portal.

• Enter the PAN details to login to the account on the portal.

• Select the relevant assessment year for which the refund is pending from the drop-down menu and input the Captcha Code.

• Finally, click ‘Submit’ to view the IT refund status for the selected Assessment Year. 

Checking IT refund status through the Income Tax website 

Another option to check the refund status online is through the Income Tax Portal. The steps for the same are,

• Visit the income tax portal and log in to the account using the PAN number.

• Click on 'e-File,' select 'Income Tax Returns,' followed by ‘View Filed Returns.’

• Status of both current and past income tax returns can be available here. 

• Finally, click on 'View details,' to check the status of the income tax refund.

Checking IT refund status through TRACES

Income tax refund status is also available on the TRACES website which can be checked using the following steps.  

• Visit the TRACES portal and login using valid credentials like the User ID, Password, and PAN.

• Next, click on ‘e-File,’ followed by selecting ‘Income Tax Returns,’ and finally ‘View Form 26AS.’

• This will open the TRACES page

• Click on ‘View Tax Credit (Form 26AS/Annual tax statement)’ at the bottom of this page.

• Finally, select the Assessment Year from the drop-down menu and choose ‘view as text.’

How to Claim Income Tax Refund?

The entire process of filing an ITR is completed after it is successfully e-verified through any of the available online or offline options within 30 days of filing the return. The Department then begins the assessment process where all the relevant details filed in the ITR for the relevant financial year are thoroughly verified. This includes an assessment of income from all the sources (such as salary, business or professional income, rental income or other sources) and the validity of all the eligible deductions and exemptions claimed in the ITR.

Once the assessment is completed, the Department calculates the refund amount due, if any. The refund is then credited directly to the taxpayer’s pre-validated bank account. However, if the taxpayers do not receive the refund in a few weeks, they need to check the refund status through the income tax portal.

Conclusion

Claiming an income tax refund is a simple process that allows taxpayers to recover any excess tax paid during the year. It starts with filing the ITR accurately and verifying it within the due dates. The Income Tax Department allows taxpayers to check the refund status through multiple options till the time it is credited to their pre-validated bank accounts. However, in case of any delays, taxpayers can contact the Centralised Processing Centre (CPC) for further assistance.