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One of the most important reasons for filing tax return is to claim excess of tax paid to the government. Corporations and various institutions deduct tax at the time of paying wages or contract fees. However, not all the times the tax is owed to the government.

For instance; a company deducts TDS on paying Rs 1 Lakh to you for a contract and you have no other income for that year. In such cases, you can file income tax return in order to get a refund of the tax paid.

Let us understand this complete process step by step:

Filing Tax returns: In order to claim refund, you first need to file income tax returns. You can efile income tax returns at  Whether government owes you any refund or not, it is always advisable to file returns, especially if your income exceeds the basic exemption limit. Income tax return is basically a self-assessment of your income that you share with the government outlining your investments, income etc.

The government will consider TDS or advance tax as their income only once you share the self-assessment of your income with it. Usually the last date of filing returns is 31st July for individuals, which has been extended by a month to 31st August this year.

How do you become eligible for refund?

There are various aspects to it, for example say you made a donation to charity which is certified under section 80g of IT act, or if you have paid for health insurance premiums for your parents, but the employer has deducted taxes in form of TDS; In such cases, you can file claim for concession on that portion of income which is exempt from various provisions of Income tax act. 

Consider the below example:

You, an individual aged 25, earned Rs. 3,00,000 last year (2015-2016). So, as per your tax slab, your company deducted Rs. 5,000 (10% of taxable income) in TDS, and you invested around 50,000 in a tax saving FD. Therefore, the entire 50,000 that you invested in tax saving FD will get you full exemption, and the taxable income shall be nil.

How is total refund calculated?

It is very easy, income tax department calculates the total tax that you have paid in the financial year, and subtract that with your total tax liability in order to determine the total refund owed to you, and adds interest at the rate of 0.5% per month from the first day of the assessment year till the date when the refund is paid to you.
It is, however, important to note that interest is payable only if the amount of refund due is more than 10% of the tax liability of the taxpayer.

Let us understand this with some scenarios 

In the above example, if the refund for assessment year 2015-2016 is Rs 5,000, and is paid in the month of October this year; then you would get an interest of 0.5% per month on principle of 5,000 for six months in addition to the refund owed - Rs 5,000.

But if the tax payer had only invested 4,000 instead of 50,000 in tax saving fixed deposit, then the total refund owed would be Rs 400, which is less than 10% of the total tax payable 4,600 (50,000 taxable income minus 4,000 exempt for Tax saving FD = Taxable income of 46,000), and in such case, no interest would be paid regardless of when the income tax refund is disbursed.

Once you have file for income tax refund please keep in mind that:

• It usually takes about 4-8 months to receive refund once you file tax returns, however you can check status of your return online after 2-3 weeks from the date you have filed the return.

• You can request income tax refund to be reissued if either you have closed down your bank account or have not received the check. In order to do so, you would need to visit “My Account-Refund Re-issue Request” on the IT department’s official website.

• Income tax refunds are not taxable as it is only refund of excess tax that you have paid and not income.

• If you have not received your tax refunds or are unable to track it after the time frame as mentioned above then contact Central Processing Centre of the Income Tax Department at 1800 4250 0025, and 080-2650 0025.

On a lighter note: If you get your refunds in Diwali, then you can buy extra goodies or sweets, and if you get them in December, you can treat your family to a short trip or a vacation.

Note: The above article has been provided by Quicko. is engaged in assisting in online ITR preparation and filing. You can sign up with and efile your tax returns within minutes absolutely free and also get maximum tax refund. The author can be contacted at


Published by

Anand Satyapanthi
(Co-founder at, Chartered Accountant)
Category Income Tax   Report

2 Likes   47 Shares   13335 Views


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