Have you ever eagerly awaited a parcel delivery and tracked its every move? Well, waiting for your income tax refund can be something similar. Imagine, you’ve filed your tax return, you’re expecting a refund, and now you’re refreshing your bank account like it’s your favorite social media feed. But wait, what’s taking so long? Is there a way to know what’s happening behind the scenes?
That’s where understanding your income tax refund status comes in. Just like tracking your online orders, you can track your refund journey from the ITD to your bank account. Let’s understand the refund process and the reasons you have not received a refund yet and what you can do about it.
How does an income tax refund get issued?
The ITD processes an ITR once it is filed and verified. It checks if you have reported the income as per the records of the ITD reflected in documents such as Form 26AS or AIS. Once the ITR is processed, the ITD issues an intimation u/s 143(1) communicating about the accuracy as to whether the return filed has any tax dues or refund or is correctly filed. If there is a refund, it gets credited to your prevalidated bank account after the refund is processed. The ITD will verify the tax payments against your PAN with the available information before issuing the refund.
Common reasons why your tax refund may get stuck….
| Sr. No. | Reason | Situation | Action |
|---|---|---|---|
| 1 | ITR not yet processed | ITD has not yet processed the ITR and it still shows under processing state on the ITD portal. The ITD has significantly reduced the processing time to 10-20 days from the date of e-verification. | No action is required as such. Wait for the ITD to process the ITR. You can try connecting with ITD on their helpline numbers if your ITR is not processed. |
| 2 | ITR is processed, refund is issued, but not yet credited to your bank account. | The status on your e-filing portal is “Processed with Refund Due”. It takes about 10-20 days, for the refund to get credited after the return is processed. | You can check the status of your refund on the e-filing portal by entering the PAN and the relevant Assessment Year. |
| 3 | Refund Failed | 1. The bank account selected for the refund is not prevalidated 2. The bank account selected is not eligible for a refund | 1. Prevalidate the bank account. 2. (a) Add a new bank account and nominate it for a refund (b) If the bank account is already entered, nominate another bank account for a refund. (Only prevalidated bank accounts are eligible for a refund.) After these steps, submit a refund re-issue request . |
| 4 | Refund adjusted against demand due | Eligible refund gets adjusted against any previous or current outstanding demand | Login to your e-filing portal and verify all your filed returns to see if you’ve received any intimation u/s 245. |
Interest income on Refund
You will receive interest at 6% per annum on the amount of eligible refund. The interest amount is taxable under Income from Other Sources.
Interest is calculated for the period starting from April 1 of the relevant AY till the actual date of refund. In case of belated returns, the interest calculation begins from the date of filing the ITR instead of April 1 giving you one more reason to file the ITR before the due date.
Let’s say, you are eligible to receive a refund of ₹20,000. The date of filing your ITR was 14th July 2023 and you got a refund credited on 28th August 2023. In this case, you will receive an interest income of ₹493 (₹20,000* 6 *150/365) on the refund.
For further queries, comment below!