Quick Summary
Tax Refund is the excess amount paid to the government as taxes (TDS, advance tax, self-assessment tax) over and above the actual tax liability computed in the Income Tax Return.
A Tax Refund occurs when the total taxes paid by a taxpayer (including TDS, advance tax, and self-assessment tax) exceed the actual tax liability computed based on their total income. The Income Tax Department refunds this excess amount after processing the Income Tax Return.
When Are You Eligible for Refund?
- TDS deducted is more than actual tax liability
- Advance tax paid exceeds final tax liability
- Self-assessment tax paid is more than required
- Tax deducted on exempt income
- Double taxation relief claimed
- Carry forward losses reduce tax liability
How to Claim Tax Refund
- File your Income Tax Return accurately
- Ensure all TDS credits are reflected in Form 26AS
- Pre-filled ITR will show the refund amount
- Verify bank account details for direct credit
- Submit the verified return
- Track refund status on the e-filing portal
Interest on Refund
- Section 244A: Interest at 0.5% per month from April 1 of Assessment Year
- Or from date of tax payment, whichever is later
- Interest calculated till the date of refund grant
- No interest if refund amount is less than 10% of tax payable
- Interest is taxable in the year of receipt
Refund Processing Timeline
| Stage | Timeline |
|---|---|
| ITR Processing | 10-60 days from filing |
| Refund Calculation | After ITR is processed |
| ECS Transfer | 7-14 days after approval |
Key Points
- Excess tax paid over actual liability
- Claimed through Income Tax Return
- Direct credit to bank account via ECS
- Interest payable at 0.5% per month under Section 244A
- Track status on e-filing portal
- Interest on refund is taxable