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is IT refund taxable or not

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SURAJ MENDON (ACCOUNTANT CUM TAX ASSISTANT)   (31 Points)
Replied 26 July 2012

??


SURAJ MENDON (ACCOUNTANT CUM TAX ASSISTANT)   (31 Points)
Replied 26 July 2012

How come interest on Income tax refund is taxable, under which section is that stated?

since penalty for late payment or non payment of income tax is not allowed as deduction then why interest on refund taxable?


Madhu (student) (65 Points)
Replied 06 September 2012

Dear All

Income tax department is deducting TDS then how to get the certificate as we are getiing the credit in 26AS and deduction by CPC,Bangalore and till now we didnot recd

May i know the procedure for getting the same


U S Sharma (glidor@gmail.com) (21056 Points)
Replied 06 September 2012

Originally posted by : Madhu

Dear All

Income tax department is deducting TDS then how to get the certificate as we are getiing the credit in 26AS and deduction by CPC,Bangalore and till now we didnot recd

May i know the procedure for getting the same

why the department is deducting TDS from you ? are you employed there or executing any works contract under incometax, 

 

please furnish more details !!


Madhu (student) (65 Points)
Replied 06 September 2012

Our company Got an Entry in 26 AS for 2011-12 " ASSISTANT COMMISSIONER OF INCOME TAX CENTRALIZED PROCESSING CENTRE, BANGALOR TAN No.BLRA15403D u/s 195 on 02-11-2011 i think it for Intrest on IT refund but we have to get the certificate for that but we dont to whom we have to approach



CA.Saibaburao Nanduri (Chartered Accountant) (3847 Points)
Replied 06 September 2012

Dear Mr. Angad kr kannaujiva !

While preparing P & L a/c, we generally shall not take income-tax to the debit of profit and loss account just like other other revenue expenditure such as sales-tax, Licences and  taxes etc. Even if some one  debits the same in P&L account, it must be added back to arrive  taxable portion of the  net profit. Hence the income-tax refund in not taxable. As every body in this forum rightly and aptly expressing, that interest on I.T refund is taxable. This is  applicable to all classes of assesses including salaried class.


U S Sharma (glidor@gmail.com) (21056 Points)
Replied 06 September 2012

Originally posted by : Madhu

Our company Got an Entry in 26 AS for 2011-12 " ASSISTANT COMMISSIONER OF INCOME TAX CENTRALIZED PROCESSING CENTRE, BANGALOR TAN No.BLRA15403D u/s 195 on 02-11-2011 i think it for Intrest on IT refund but we have to get the certificate for that but we dont to whom we have to approach

discuss the issue with your auditor, as he can co-relate the issue with your accounts / returns and can make you understand his best possible way . as 26AS itself may be treated as a TDS 16A, coz all the data is mentioned therein, 


CA.Saibaburao Nanduri (Chartered Accountant) (3847 Points)
Replied 06 September 2012

Dear Madhu ! It is the duty and responsibility of the deductor to issue a certificate to the deductee  in Form 16A. If you e-file your return, you will automatically get the credit. No physical copy of form 16A is required as there is display in Form 26AS.


U S Sharma (glidor@gmail.com) (21056 Points)
Replied 06 September 2012

Originally posted by : Madhu

Our company Got an Entry in 26 AS for 2011-12 " ASSISTANT COMMISSIONER OF INCOME TAX CENTRALIZED PROCESSING CENTRE, BANGALOR TAN No.BLRA15403D u/s 195 on 02-11-2011 i think it for Intrest on IT refund but we have to get the certificate for that but we dont to whom we have to approach

discuss the issue with your auditor, as he can co-relate the issue with your accounts / returns and can make you understand his best possible way . as 26AS itself may be treated as a TDS 16A, coz all the data is mentioned therein, 


U S Sharma (glidor@gmail.com) (21056 Points)
Replied 06 September 2012

Originally posted by : CA.Saibaburao Nanduri

Dear Mr. Angad kr kannaujiva !

While preparing P & L a/c, we generally shall not take income-tax to the debit of profit and loss account just like other other revenue expenditure such as sales-tax, Licences and  taxes etc. Even if some one  debits the same in P&L account, it must be added back to arrive  taxable portion of the  net profit. Hence the income-tax refund in not taxable. As every body in this forum rightly and aptly expressing, that interest on I.T refund is taxable. This is  applicable to all classes of assesses including salaried class.

Income Tax refund is the amount which was tax paid at the time of payment, hence its capital receipt and would be added back to capital direct, but as the interest was not paid by yourself, and as such it would be additional income under IFOS, and would get taxable.


Avinash Kumar (CA Final Student & Working as Deputy Manager Accounts)   (79 Points)
Replied 06 September 2012

Interest received  on Income tax refund would be taxable under Income from other sources:

Suppose income tax refund is 110 (Rs 10 Intt)

then treatment in books will be as follow:

individual:

Bank a/c Dr         110

  Individual Capital a/c Cr    100

  Intt on IT Refund          Cr      10

Partnership:

Bank a/c               Dr       110

   Partners Capital A/c (In their ratio)    Cr 100

(or Adv Income tax/TDS)

   Intt on IT Refund                                  Cr      10

Company

Bank a/c            Dr          110

       To Advance Tax/TDS        100

       To Intt on IT refund               10

 

If any correction required pls suggest


Rajesh (taxation) (22 Points)
Replied 21 October 2014

Since TDS is already included in the total income and if the same is taxable at the time of refund then it will be a case of double taxation on the same income . accordingly it violate basic principle of taxability.

conclusion:- income tax refund -not taxable at all

interest on income tax refund:- taxable under other sources


mukesh (student) (67 Points)
Replied 15 July 2016

can you quote the section under which the income tax refund is exempt?


Virendra Chauhan (Manager Accounts) (121 Points)
Replied 17 October 2016

Dear All,

Plz clearfy that is IT refund an income....? if yes, then why......?



Ayush (Executive ) (6332 Points)
Replied 09 February 2023

In the context of income tax, an IT refund refers to a return of excess tax paid by an individual or a business entity. It is not considered to be income in the traditional sense.



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