Filing income tax returns (ITR) is the responsibility of every taxpayer. It ensures compliance with tax laws and helps contribute to the nation’s development. However, once you have diligently filed your ITR, the natural question that arises is, “How long does it take for the refund to come into my account?”
The answer to this question depends on various factors, including the processing time of the tax authorities, accuracy of the information provided, and the mode of refund chosen.
In this article, we will delve into the typical timeline for income tax refunds and explore factors that can impact the duration.
What is ITR Refund?
If the amount of taxes paid exceeds the actual tax liability of the assessee, then the taxpayer can claim such excess amount as a refund. The refund can be claimed only by filing the Income Tax Return (ITR).
ITR Refund Processing Time
The Income Tax Department aims to process a majority of refunds within 20 to 45 days from the date of filing the ITR. However, it is essential to understand that this is just an approximate time-frame, and the actual duration may vary based on several factors.
Naveen Wadhwa, DGM, Taxmann, says, “The refund is granted after the Centralized Processing Centre (CPC) processes the Income Tax return. The returns are processed automatically by CPC to verify the correctness of arithmetical calculations, deductions claimed, etc. The maximum time limit to process the ITR and send an intimation by CPC is 9 months from the end of the financial year in which the return is furnished. However, generally, the returns are processed earlier than these time limits, and refunds are issued if no complexities are involved in the ITR.”
Thankfully, several taxpayers are said to have received their tax refund within a week this year, which establishes the I-T Department’s claim of faster refund processing.
Accuracy of Information
One of the primary reasons for delayed refunds is errors or discrepancies in the information provided while filing the ITR.
Adhil Shetty, CEO, Bankbazaar.com, says, “To expedite the refund process, ensure that all the details in your tax return, such as PAN, bank account number, address, and income details, are accurate and up to date. Any inaccuracies can lead to additional verification and extend the refund timeline.”
Mode of Refund
The Income Tax Department offers two modes of refund – direct credit to a bank account or issuance of a refund cheque. The direct credit method is faster and more secure. If you have provided your correct bank account details, the refund amount will be credited directly to your account. On the other hand, if you have opted for a refund cheque, it may take more time as it involves the physical delivery of the cheque.
E-Verification and Aadhaar Linking
To avoid delays in the refund process, it is essential to e-verify your ITR promptly. E-verification can be done through various methods, such as using a one-time password (OTP) or net banking. Additionally, linking your Aadhaar card to your PAN is mandatory for filing ITR. If you haven’t done this yet, it may lead to refund delays and other compliance-related issues.
Scrutiny and Verification
In some cases, the Income Tax Department may subject your ITR to scrutiny or verification for accuracy and compliance. If your ITR comes under scrutiny, the refund process can be significantly delayed. However, if your financial affairs are in order, you need not worry, and the refund will be processed once the verification is completed.
Refund Status Tracking
By visiting the official website of the Income Tax Department and entering the necessary details, taxpayers can check the status of their refund.
Delay Due to High Volumes
During peak tax-filing seasons or when there is an unusually high volume of tax returns, the processing time may get extended. This is quite common, and taxpayers are encouraged to be patient during such periods.
Interest on Tax Refund
Interest is paid on the tax refund at the rate of 0.5% for every month or part of the month. “The interest on refund arising out of TDS, TCS, or Advance Tax is computed from April 1 of the Assessment Year to the date on which the refund is granted, provided the return of income is filed before the due date. If the ITR is not filed by the due date, the interest is computed from the date of filing the return of income to the date on which the refund is granted,” informs Wadhwa.
It is essential to ensure that you file your ITR correctly, double-check all the details, and opt for direct credit to your bank account for faster processing. Moreover, staying informed about the latest updates from the Income Tax Department can help you track the status of your refund and remain aware of any changes in the refund process.