How to claim refund while filing income tax return

Have you failed to reporting some tax saving investment to your
employer or did you make the investment after submitting your
investment declaration to the employer? Then there is a possibility of
you being eligible for a tax refund. "Atax refund could be due to the
following: tax deduction at source at a rate higher than the actual
tax payable; wrong (ie, higher) estimation of income while computing
advance tax liability; not reporting all investments to the employer
while the employer deducts taxes on salary; and claim of exemption in
tax returns," says Sonu Iyer, tax partner, Ernst & Young.

Most companies require employees to declare at the beginning of the
financial year their proposed investments for tax
exemptions/deductions. House rent and leave travel allowances are the
common exemptions that can be claimed, while interest on housing loan,
investments in PPF, NSC, ELSS, life insurance premiums, home loan
principal repayment, stamp duty/registration fee, and long-term
infrastructure bonds come under common deductions. Other deductions
include medical insurance premium (section 80D), interest on education
loan (section 80E), maintenance of disabled dependent (section 80DD),
etc.

"Some employees fail to make the declaration, while some may give the
details but fail to provide the relevant documentary proof within the
time frame prescribed by the employer. In either case, employees can
claim tax exemptions/deductions only while filing tax returns.

This results in a tax refund," says Vaibhav Sankla executive director,
Adroit Tax Services. "The deduction on interest on the housing loan,
based on the provisional certificate obtained from the housing finance
company/bank during the financial year, is reflected inForm 16. For FY
2010-11, since the rates were on the rise, the final certificate would
show a higher amount of interest for those who took loan on a variable
rate. This, too, can be a reason for a tax refund claim," Sankla says.
In the case of retired individuals/senior citizens, banks deduct
income-tax at source if they fail to furnish declaration in Form
15G/15H for non-deduction of tax on their interest income. Further,
ifPAN is not provided, the deduction rate goes up to 20% from 10%.

For non-residents, banks often deduct taxes at 30.9% (or lower as per
India's tax treaty with the country they reside in) on the interest
earned by NRO accounts. Even tenants of non-resident landlords deduct
income tax at 30.9% on the rent paid. Most nonresidents fall in either
the 0% or 10% tax slab as their Indian income is limited. This means,
nonresidents often claim refund of the excess tax deducted.

Some individuals pay advance tax on the capital gains they expect
during the year. This can be adjusted against any capital loss they
may incur later in the year. The amount of capital gain could also be
lower due to indexation, deductions u/s 54/54EC/54F, incorrect cost
calculation etc.

ELIGIBILITY FOR REFUND

"Taxpayers should first calculate their final tax liability in
accord-inance with the tax slabs applicable to them. If the total tax
liability is less than the taxes paid or deducted during the year,
they would be eligible for a tax refund," says Vineet Agarwal,
director - tax and regulatory services, KPMG. Ensure tax exemptions
and/or deductions are mentioned correctly. In the case of a home loan,
for instance, ensure the amount on the final certificate from the
housing finance company is the same as in the provisional certificate
you submitted to the employer.

CALCULATING REFUND

"For calculating refund, you have to calculate taxes on income after
applying the applicable income tax rates. Once you arrive at the total
tax payable, deduct all the tax deducted at source and advance taxes
and self assessment tax paid (if any). The balance (if negative) is
the refund amount," Iyer adds.

REJECTION OF TAX REFUND

The most common reason is incorrect calculation of tax payable by the
taxpayer. "Refund can also be rejected if the amount shown as TDS in
the returns does not match with the details in the database of the
income-tax department," Agarwal of KPMG says. If you have mentioned
the PAN or assessment year wrongly, then, unless corrective action is
taken, the refund claim will be rejected.

TRACKING REFUND

If you filed returns online, visit
tin.tin.nsdl.com/oltas/refundstatuslogin. html to know the refund
status. Enter your PAN, select the assessment year and click submit to
get the details. You can also send an email to itro@sbi.co.in or
refunds@i ncometaxindia.gov.in for refund related queries. If you have
filed the returns through a chartered accountant, you can check the
refund status by contacting theSBI helpdesk or the aaykar sampark. It
would be advisable to follow up with the assessing officer of the
jurisdiction where the return was filed to get the correct status.

PROCESSING TIME FOR REFUND

E-filing results in quicker refunds. "Taxpayers should mention the
correct bank account number if they want the refund cheque to be
deposited in their account. If a taxpayer wants the refund directly
credited to the bank account, then he/she should provide the MICR of
the bank's branch as well," Sankla says. If you opt to receive the
refund by way of cheque, ensure that you mention your permanent
address in the tax return form. Else, in case you change the address
before receiving the refund, the refund cheque would be returned
undelivered to the I-T department. If the cheque is invalid/expired by
the time it reaches you, intimate the jurisdictional office and send
the cheque back to the refund banker for re-issue.

In cases of e-filing, the refund is received within two to seven
months. For offline returns, it often takes anywhere between one and
two years. In case you haven't received your tax refund, file an
application with the grievance cell or the income-tax ombudsman. "The
taxpayer should visit the tax office for follow-up action on the
refund and enquire about the reasons for it not being processed. The
taxpayer may also approach the assessing officer ('AO') concerned,
with necessary documents. However, if no action is taken by the AO,
the taxpayer can write to the jurisdictional chief commissioner with
copies of the letter/s written to the assessing officer and with a
copy of the tax return filed," says Agarwal.

Courtesy:ET