Have you ever found yourself tracking a package online, eagerly waiting for it to arrive? Waiting for your income tax refund can feel just like that. You’ve filed your ITR, you’re expecting a refund, and you’re checking your bank account more often than your social media feed.
See, once you e-file and e-verify your ITR, it is processed by the Income Tax Department.
They check if you have reported the income as per their records (such as Form 26AS or AIS) and once the ITR is processed, the ITD issues an intimation u/s 143(1) communicating either of the following,
- If any excess taxes were paid, you’ll be eligible for a refund
- If there’s a shortfall in tax payment, a demand is issued
- In case of no refund or dues, just an acknowledgement that the return has been filed correctly.
If you are eligible for a tax refund, you can check the status of your ITR by logging in to the e-filing portal → Services → Know Your Refund Status.
Even if you have done your part right, your tax refund may get stuck and some of the possible reasons could be as follows:
Interest income on Refund
You will receive interest at 6% per annum on the amount of eligible refund. This 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, which is another reason why you should file the ITR before 31st July.
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 of ₹493 (₹20,000 * 6 * 150/365) on the refund.