A taxpayer is eligible for interest on refunds but not all refunds, as per rules. The interest component was missing in the income tax refunds received by many taxpayers. 

When and how much interest one is eligible for.

The tax department issues a refund after processing an ITR. One can claim refunds by filing the ITR within a stipulated time. In case your tax liability for the financial year is less than the tax paid, by way of tax deducted at source (TDS), tax collected at source (TCS), advance tax or self-assessment test, you are eligible for tax refunds.

1. What to do if you have not received the refund yet?

Step 1: Visit the income tax e-filing portal and log in with user ID, password, and date of birth/date of incorporation.Step 2: Click on the ‘My Account’ tab and select the ‘Refund/Demand Status’ option.Step 3: The status of your returns will be displayed along with the information such as assessment year, mode of payment, and the reason for refund failure if any.

2. What are the possible refund statuses?

The refund status can be one of the following:

  • No e-Filing has been done for this assessment year
  • Not determined
  • Refund paid
  • No demand no refund
  • ITR processed refund determined and sent out to Refund Banker
  • Refund unpaid
  • Demand determined
  • Contact Jurisdictional Assessing Officer

3. Reasons why the refund hasn’t reached you and how to handle it

There can be many reasons for your refund not reaching you. Here is a table of reasons and the action plans you need to follow in each of those cases.

Reasons why the refund is not done Action Plans
IT department needs additional documentation to process your refund request. Contact the assessing officer immediately via telephone or post and submit the documentation requested.

Get an acknowledgement from the officer on the same.
Refund request rejected. As per the IT department, you owe them taxes. You may receive a notice from the department stating the outstanding tax amount. 

In this case, check all your documents and recalculate the tax liability and refund receivable. If the figures you have filed in the returns form is correct, file a rectification supporting your claim. 

If the returns filed is found to be incorrect, pay the outstanding tax demanded by the department within the time limit mentioned in the notice.
Refund request found to be incorrect as per the IT department. Hence, the refund is rejected. If the department thinks your refund request is incorrect, a notice will be issued to you explaining why they think it is incorrect.

Even if you receive the notice, you can file a rectification to support your claim.
Forgot to include a deduction you are eligible for. If the IT department has not started to process your returns, you can go ahead to revise your returns and add the missed out deduction you are eligible for.
Bank account details provided to the IT department while filing returns has changed. If the bank account details have changed, communicate the latest account number and MICR code to your assessing officer. 

The assessing officer will convey this information to the bank and ask to update the money transfer process.
Refund request under process. The delay could be at 2 levels:

  1. The IT department is taking time to process your request.
  2. The IT department has already processed but there is a delay at the bank’s end.
 Make sure that you have sent the ITR-V within 120 days from the date of e-filing.

If not, you have to revise your returns and send the new acknowledgement to CPC, Bengaluru.
Filing returns on a physical form and not online. Processing physical filing forms takes time. Wait for the IT department to reconcile the paperwork.