Important Points for Faster Processing Income Tax Refunds

Every Indian Taxpayer contributes to the well-being of the nation by allowing the outgo of some money from its personal account in the form of Tax. Centralized Processing Center (CPC) governed by the Income Tax Department is responsible for verifying the documents and processing them for the claimed tax refunds. There is no way to escape the tax department’s radar, as it has its own set of determiners to check out whether the compliance is correct or not. If everything goes well, the tax refund is processed within a week of filing the return.

Latest Update in Tax Refund

6th September 2022

• As per the Delhi high court ruling, the assessee does not need to file a separate claim for a refund of income tax as the same is deemed to have been incorporated in the I-T return filed through the assessee. read more

15th December 2021

• The department of income tax has declared INR 1.3 trillion tax refund for the financial year 2020-21. The income tax department has confirmed via an official tweeter account.

CBDT has said that they had released 10.2 lakh refunds with a value of more than Rs 4250 crores. CBDT has also said that they will also issue a refund of up to Rs 5 Lakh in near future to provide some relief to the assessee of COVID-19 lockdown. CBDT has also said that they are awaiting an E-mail response from 1.74 lakh taxpayers to issue their tax refunds.

CBDT also said that for the benefit of taxpayer’s CBDT will send reminder mail and the taxpayer will have to confirm the mail within 7 days so that refund will be processed accordingly. CBDT will send this reminder so that the taxpayer will confirm their bank account details.

Authorities possess a solid database of taxpayer’s information such as his bank interest details, tax withholdings by the employer, capital gains, dividends, etc. the major cause of delay in tax processing is the mismatch of information provided by the taxpayer when compared with the data available with the authorities. The data will further go through scrutiny in order to gain satisfactory results.

Best Tips for Faster Processing of Tax Refunds

Here, we described the top points of faster processing income tax refunds.

Be Careful with the Preparation of Tax Returns

Attention salaried individuals, make sure that the return acquires salary information mentioned in Form 16 (from the current as well as previous employers) and should match the salary information in Form 26A available on the tax department website. ITRs come with pre-filled with details such as your salary and interest on fixed deposits/NRO savings bank details and so on, make sure that no tampering is done with the already filled information and nothing important is missed out from your side. Mismatches will attract notices from CPC and delay in processing the refunds.

The Refund Amount will be Directed to an Active Bank Account

Income Tax Return facilitates with the feature of adding multiple bank accounts for refund credits. However, the refund will only be credited to the account validated by CPC. Well, it is better to select only one bank account for a refund and ensure that the account is active.

Prior Bank Account Validation for Direct Credit Refunds

Traditionally the refunds beyond Rs. 50,000 were compensated by the means of cheque payments. From 1st March 2019, the only a pre-validated bank account will receive e-refunds. Therefore it needs a pre-verification of your bank account.

• Sign in to e-filing portal
• From the profile, setting dropdown select ‘Pre-validate your Bank Account‘
• Mention the details asked such as Bank Account Number, Account Type, IFSC code, Mobile number, email, etc.
• The status of the request will be sent to your registered email id.
• It is mandatory to note that your pre-validation process is complete on which refund is expected.

Electronic Verification of ITR; Form ITR V

After filing the return, the time limit of 120 days is assigned to deliver the self – attested copy of ITRV to the CPC department. The ITR will not be processed by CPC until ITR V is submitted to the CPC department.

E-verification is possible using the below-mentioned utilities:

• Adhaar OTP
• Electronic verification code by logging to e-filing through Net Banking
• Digital Signature Certificate

Track the Status of Tax Refunds via Tax Portal

Once the ITR is processed, the department will send you an intimation U/s 143(1) on your email id. If the department seeks more information or your ITR is picked for a tax audit (as per the situation demands), then you will receive a notice from the tax department.

The tax portal facilitates its taxpayers with the feature of tracking the status of income tax refunds. You can do so by:

• Logging into the IT e-filing website.
• Clicking on the ‘My Accounts’ tab and selecting Refund/Demand Status

Another way to track the status of a refund is by visiting: https://tin.tin.nsdl.com/oltas/refundstatuslogin.html

Documents required for checking the status of refund are PAN and Assessment Year information.

What is the Reason for the Exception in the Refund Status for Various People?

The income tax returns are to be not furnished only on the grounds of the date but also to your income and refund amount. “They are processing the returns in batches, even going by the type of income-tax return forms The income tax department has declared that ITR 1, 2, 3, 4, 5, 6 & 7 for AY 2020-21 is now available for e-Filing. Lets us have a deeper into Income Tax Return ITR Form. Read more . First, the ITR 1 and 2 are processed. Also, if the taxpayer has multiple sources of income, it takes time to process returns.”

Your return will be processed faster than those who are availing for the returns; this is applied for those whose income is less and has no refund to avail.

“Nil refund returns are processed faster when compared with returns where refunds are sought. While the returns with smaller amounts of refunds too might be processed faster, refunds above Rs 40,000-50,000 need to follow the internal risk management procedure of the income tax department,” said Paras Savla, partner at KPB & Associates.

“For most of my clients, the refunds of higher amounts have not yet been processed. However, those demanding a refund below Rs 10,000 have already been processed.” agreeing on the ongoing thing CA Mehul Sheth.

The information submitted by you has been disguised from the details which are already held with them about you by the tax heads and are the reason that the IT returns seek time to process. The comparison is from the collection of the data miner Dr Suresh Surana Founder, RSM India, says, “The processing of the income tax returns Easy guide to file an income tax return for the FY (financial year) 2019-20. Also, we added the document checklist related to Personal, Income, tax, bank, real estate, investment, etc. Read more is done by the Centralized Processing Centre (CPC) Bengaluru. The data analytics confirms the details filed in the Income Tax Returns (ITRs) with the income-tax department database and in case both are in conformity, the returns are processed.”

Inconsistent Information

There might be some due tax that you have not filed yet or there can be some inconsistency in the data for the before year. “The delay could also be due to discrepancies in the data given in the return filed and as per the income-tax database. In such instances, the case gets referred for scrutiny assessment and outstanding dues can take more than a year to get settled,”

On the grounds of the assessee, several taxes are received by numerous entities and then given to the government, deposition of the taxes might not proceed as due to the lockdown. This might affect the process of furnishing your return.

“In some cases, the TDS has been deducted but has not been paid to the Government and so there is a mismatch.” said Savla.

It is also important to cross check your bank details in the return filing as the electronic deposit is now mandatory and there will be no cheque incoming for refunds.

Some alterations were being initiated in the income tax forms via tax filing duration so as to involve some more information about tax savings investment done in the lockdown. In the finish of November for the return-filing, 800 pages of clarification have been shared but in June and August 2020 the original forms were being delivered. It resembles conflict in furnishing or processing of the tax returns.

What Implementations Need to be done if the Taxpayers Refund gets Late?

Some steps are to be followed by you if you see that the refund payment or its process of tax returns gets delayed. “You can call the helpline number of the Central Processing Facility in Bangalore and request it to expedite the return and refund processing,” comment Sheth. 1800 103 4455 (or) +91-80-46605200 are the number for the assistance for the CPC Bangalore.

By doing so if no positive results were undertaken then from your own tax account you can furnish the request for complaint. Surana said “If there is substantial delay, they may even prefer making an online application in the e-nivaran tab,”.

Keep monitor the return status and utilize the tools to request your refunds.