Income Tax Refunds: All You Need to Know for Quick And Easy Refund

To claim an income tax refund, all you need to do is file your Income Tax Return (ITR) and disclose all the income, deduction and tax paid details paid information with the Income tax department. The deadline for submitting an ITR for the fiscal year 2022-2023 is approaching fast; with both online and offline options being available, taxpayers can file their ITR latest by July 31st, 2023.

Don't delay filing your tax returns; you may consider beginning with the process of e-filing your Income Tax Return today with the help of our articles from the ITR Filing series:

Easy ITR Filing Process: 10 Steps to File Your ITR Online for FY 2022-23 (AY 2023-24)

Income Tax Return for FY 2022-23: Which ITR Form Should You Choose? 

ITR Filing Made Easy: Document Checklist for FY 2022-23 Tax Season

Here's All You Need to Know About Form 26AS And How to Download It

Types of Income Often Missed While Filing Income Tax Return (ITR FY 2022-23)

Sold Your Property? Know How the Capital Gains Will be Taxed

Earned Capital Gains in FY 2022-23? Here's the ITR Form Which Salaried Individuals Must Use

Given that, when the taxpayer files their Income Tax Return, the actual tax liability is calculated based on the income and deductions declared. The excess tax amount is returned to the taxpayer if the assessed tax due is less than the tax paid. Remember, tax refunds are issued when more taxes have been paid than the actual liability.

How is income tax refund processed?

Before we get into the timeframe of how long does it take to receive the income tax refund, it's critical to understand how tax refund works.

The processing of income tax refund is rather straightforward. Once you file your returns, verify the same either electronically or by posting a physical copy of the ITR-V acknowledgement, refund processing will start. The CPC - Central Processing Unit will verify your taxes, determine if the amount of tax paid exceeds the amount of tax due, and start processing the refund. An income tax refund will automatically be placed into the taxpayer's bank account when the refund processing is finished, or a refund cheque will be mailed to your registered address.

To improve transparency and timeliness, the IT Department has moved the process totally online. The process is now much more streamlined and user-friendly thanks to digitization, which has reduced the time taken to process refunds. Many taxpayers who have already submitted their returns are curious as to when they will get their refunds from the Income Tax Department, if any.

What is the expected timeline to receive income tax refund?

The taxpayer receives an email from the IT Department once the refund has been processed. Usually, the time taken for an income tax refund is 20-45 days (with an average time of 90 days) after ITR has been processed, provided that you have filed your Income Tax Return and verified the same on time.

However, CBDT Chairman Nitin Gupta last week said "The average time taken for issuing refunds by the income tax department has been brought down significantly, as the tax department is leveraging technology in a big way and has been working to ensure 'ease of doing business' for the taxpayers by promoting voluntary compliance." In the year 2022-23, 80% of refunds were issued in the first 30 days of filing returns.

Consequently, to estimate with precision when you will receive your tax refunds. Depending on each individual's case-to-case basis, it may take 10 to 30 days or even longer. The internal procedure of the Income Tax Department completely determines how long it will take to get the refund of income taxes. In order to facilitate quicker refund processing with an anticipated turnover of a few days rather than a few months, the Income Tax Department launched a new refund processing system in February 2021. However, it is a fact that early filers usually get their refunds early if they have correctly filed their returns.

How taxpayers can speed up the income tax refund process?

Here are some elements to help you get your tax refund faster:

• Early ITR Filing:  You will get your refund faster if you file your ITR as soon as possible. It is important to submit your ITR well before the deadline. This not only enables quick processing but also gives you many opportunities to fix any issues or anomalies.

• Opt for E-filing:  Filing your ITR is quicker and more effective when done electronically. Additionally, it lessens the chance of mistakes. Even first-time filers may easily complete the process thanks to the user-friendly e-filing portal the IT Department.

• Ensure Accurate Information:  Verify that all of the ITR's data is accurate. Any discrepancies might result in a delay. Verify all of the information, including income, deductions, and tax paid, before completing the ITR. There are 7 types of ITR forms for different types of taxpayers. Therefore, while completing an Income Tax Return for the assessment year 2023-2024, the relevant form must be used.

• Verify Your Filled ITR Details:  As soon as you file your ITR, make sure to verify it. Delays in verification can cause delays in refund processing. Aadhaar OTP and EVC are two examples of electronic verification methods that the IT Department provides.

As a result, in order to limit the likelihood of any errors or delays in obtaining your tax refund, make sure your Income Tax Return is submitted correctly and on time.

How to track income tax refund status?

The Income Tax Department provides an online tool for monitoring the progress of your refund. Ten days after their refund has been processed, taxpayers can check the status of their return.

Follow these 5 simple steps to track your income tax refund:

Step #1:  Taxpayers can check income tax refund status online through the income tax e-filing website/portal - https://www.incometax.gov.in/iec/foportal/. You will need PAN and Aadhaar details and the registered mobile number.

Step #2:  As the taxpayer opens the www.incometax.gov.in portal, you will have to log in to the account using PAN details, OTP and by entering the Captcha.

Step #3:  Once logged in, the taxpayer has to click on the e-file option. Next, go to the Income tax returns tab and click the View Filed Returns Option.

Step #4:  The taxpayer can check the status of the latest filed ITR

Step #5:  Now click on the 'View Details' option from where you will be able to check the status of your income tax refund. Depending on the stage of the refund process, the status can be 'Refund paid,' 'Refund failed,' 'Refund expired', and so on.

In case of any queries related to an income tax refund, you can contact the 'Aaykar Sampark Kendra'. The toll-free helpline of the Aaykar Sampark Kendra Kendra is - 1800-180-1961. You can even send a mail with your refund query to refunds@incometax.gov.in.

To conclude...

Although the income tax refund process is straightforward and quick, the amount of time it needs to be completed might change based on a variety of factors. If you want to get your tax refund as soon as possible, you need to complete e-filing your ITR well on time, i.e. before July 31st, 2023.

Understanding the tax refund process and using best practices to expedite it can help taxpayers ensure smooth and timely refund processing. It is essential to be knowledgeable about and current with tax laws and regulations in order to reduce issues throughout the ITR filing and return process.

MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.

She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.

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Disclaimer: This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision.