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Written by Kajal jha& Shubham srivastava Dt. January 13th, 2023

The Term “Income tax” refers to the type of tax that the government imposed on income earned by the person (defined in the Income Tax Act, 1961) during the previous year & such income is to be assessed in the Assessment year.

As per section 2 (31) of the Income Tax Act, 1961 ” person” Includes:

  • An individual,
  • A Hindu undivided family,
  • A company,
  • A firm,
  • An association of persons or a body of individuals, whether incorporated or not,
  • A local authority, and
  • Every artificial juridical person.

As per section 3 of the Income Tax Act, 1961″Previous year” is defined.
For the purposes of this Act, “Previous year” means the financial year immediately preceding the assessment year:
Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year.

As per section 2(9) of the Income Tax Act, 1961 “Assessment year” is defined.
“Assessment year” is the period (from April 1 to March 31) during which you are taxed on the income you received in a given financial year.

Provision relating to Refund
Income tax return, often known as IT refund, occurs when an Assessee’s tax paid exceeds the amount is obligated to pay. It is computed in accordance with various tax rules and sections of the Income Tax Act of 1961.
Sections 237 to section 245 deal with the provisions relating to the refund of excess tax paid by the taxpayer.

How to calculate income tax refund
Steps for the same can be followed:-

  • Calculate the total amount of tax paid for the year (by any means, i.e. advance tax or tax deducted /collected at source or self-assessment tax or payment of tax on regular assessment).
  • Calculate the actual tax payable at the year-end
  • Tax Refund shall be (A) – (B).

How to claim a refund?
Income Tax refund can be claimed only through filing a return of income within the time limit prescribed under section 139 of the Income Tax Act, 1961, In which you provide all the details of income, tax deducted at source, and along with tax paid for the previous year.

It is mandatory to file ITR online only to get the benefit of a refund in case of excess payment of tax with the effect from 01 Sep 2019 specified in the Finance (No. 2) Act, 2019.

Applicability of Interest on refund
According to section 244A of the Act, interest on delayed refunds is as:

  • Refund arising out of TDS/ TCS/ Advance Tax/ Self-Assessment tax u/s 140A:
    Interest is calculated at the rate of 0.5% per month or part of the month. In case return is filed on time, interest is calculated from the 1st of April to the date refund is granted, But if the return is not filed on time, interest is calculated from the date of filing an online return to the date refund is granted. It must be considered that if the refund amounting to less than 10% of the tax under assessment, then it is not entitled to any interest.
  • In any other case:
    Interest is calculated at the rate of 0.5% per month or part of the month from the date of payment of tax to the date of grant of the refund.

Status of Refund:
The Status of Refund/ Demand can be checked by following the below-mentioned methods:

  • Through Income Tax Portal:
    • Login to e-Filing website with the User ID, Password, Date of Birth / Date of Incorporation, and Captcha. Go to My Account and click on “Refund / Demand Status”.
    • Below details will be displayed.
    • Assessment Year Status Reason (For Refund Failure if any) Mode of Payment is displayed.
    • Taxpayers can now view Refund/ Demand Status.

  • Through NSDL Website:
    • Visit the TIN NSDL website for refund tracking
    • Scroll down to enter your PAN and select the assessment year. Enter the captcha code and click on “Proceed.”
    • Next, you will be redirected to a page that will display a message depending on your income tax refund status on NSDL.

Written by
Kajal jha& Shubham srivastava
Articled Clerk

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