How to claim tax refunds

It is easiest to claim refund while filing returns. But if you have not done so, use Form 30

All of us love getting gifts. If it is a refund from the tax man, then it is all the more welcome. If you have paid more tax than you need to, you must file for claiming the tax refund.

Since filing for tax returns has been made mandatory, you can claim the refund while filing your return itself. That is why you must mention your bank account number and the bank ISC code while filing the return.

But if you have not claimed refund while filing the return, you can still file an application for claiming tax refund using Form 30.

“This was the common way to claim refund when filing for returns was not mandatory and you had to follow the assessing officer personally to claim refund,” says Sanjeev Gokhale, a Mumbai-based Chartered Accountant.

Once you file for refund, you are supposed to get the money within four months. The Income-Tax department has been working towards this. But be prepared to wait longer, since it can sometimes take up to a year, Gokhale warns.

Click on NEXT to look at some of the common reasons why you many need to claim refund...

Not submitted proof of tax-saving investments to employer

All salaried employees are expected to submit proof of their tax – saving investments to their employers so that it can be set off against the tax that is deducted.

Most companies ask employees to submit the proof by before March so that they can account for it in the Form 16.

But for some reason if you have done your investments, but not submitted the proof of your investments to your employer, then your tax will be deducted without calculating the deductions allowed. You can claim for refund by submitting proof of the investments while filing the tax return.

If you have made an investment that is eligible for tax-saving, but it has not been considered by employer, or you have made it after the last date set by your employer, then too it will not reflect in your Form 16. In that case too you can claim refund while filing the return.

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Interest paid on home loan not accounted for

While the repayment of principal of home loan is eligible for tax-exemption under the overall limit of Rs 100,000, under Section 80C, the repayment of interest is eligible for tax-exemption under Section 24.

Due to this, it may happen that it does not get accounted for in your Form 16.

If this is the case, you can claim refund for the interest repayment of your home loan while filing the return.

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Excess TDS deducted

For self-employed persons (those working as consultants and earning fees instead of salary) or business people, tax is deducted at source by the company which pays the fee.

Usually, TDS rate for professional fee is 10 per cent and it is cut by the company before paying the fee to the the consultant.

However, if at the end of the year, while considering the overall profit, if your earnings are lesser, you can claim tax refund.

For instance, if at the end of the year, your earnings are less than Rs 200,000, (after calculating the standard deductions), then you need not pay tax and you can claim refund.

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Loss or depreciation incurred in business

Business people can also claim refund for depreciation incurred in the first year of operation of the business.

For instance, if a businessman has incurred an expense of Rs 10 lakh (Rs 1 million) in computerising his office. He can show a flat Rs 600,000 as depreciation and claim a tax refund.

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Senior citizens

Senior citizens are eligible for non-deduction of income tax on their interest income from bank fixed deposits, provided they submit Form 15G/15H to the bank.

In case they fail to submit the form and the bank cuts TDS on their FDs, they can claim tax refund while filing the return.

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Capital gains tax paid in advance

If you have paid advance tax on the capital gains expected during the year and if instead of profit, you end up making loss or your capital gains are lower than estimated, you can claim for refund. You can also claim refund if the amount of capital gains is lower due to inflation indexation.

There is no need to attach any documents while applying for refund.  

It is possible to track the status of your refund on the I-T department's website. If your refund is delayed for long, follow it up with the tax returning officer, either in person or through letters.

Make sure you attach a copy of the return filed along with your letter.