An income tax refund is issued when the total tax paid to the government exceeds your actual tax liability for a given financial year. This excess payment can occur due to higher TDS deductions, advance tax payments, or errors in tax calculation. Taxpayers can claim a refund while filing their Income Tax Return (ITR), and once processed, the refund is generally credited directly to the registered bank account within 4 to 5 weeks of e-verification.
However, in rare cases of delay, taxpayers can raise a grievance on the income tax portal or contact the income tax helpline for assistance. Refunds are typically processed via electronic transfer, but they can also be issued through cheque if necessary.
You can easily check the refund status online through the Income Tax Portal or the NSDL Portal. Below is a detailed explanation:
What is an Income Tax Refund?
An income tax refund is the excess amount returned by the Income Tax Department when the tax paid exceeds the actual liability for a financial year.
Common situations leading to refunds:
- Excess TDS deductions by employers or banks
- Advance tax payments higher than the liability
- Errors in self-assessment tax calculations
- Deductions, exemptions, set-offs, or tax credits that reduce liability
Formula:
Income Tax Refund = Total Tax Paid – Total Tax Liability
Additionally, if the refund amount is more than 10% of the total tax payable, the department pays a simple interest on the refund at 6% per annum (0.5% per month or part thereof).
Steps to claim a refund:
- Pre-validate your bank account on the income tax portal
- File your ITR accurately
- E-verify the return to initiate refund processing
How to Check ITR Refund Status for AY 2025-26
There are two primary ways to check your refund status online:
- Through the Income Tax Portal
Step 1: Visit the Income Tax e-filing portal and log in to your account
Step 2: Go to ‘e-File’ → ‘Income Tax Returns’ → ‘View Filed Returns’
Step 3: View the status of your current and previous returns
Step 4: Click ‘View Details’ to see your refund status
- Through the NSDL Portal
Step 1: Visit the NSDL Refund Tracking Portal
Step 2: Enter your PAN, Assessment Year, and Captcha Code
Step 3: Click ‘Proceed’ under the ‘Taxpayer Refund (PAN)’ option
You will be redirected to a page showing your refund status.
Refund Processing Timeline
- Refunds are usually processed within 4 to 5 weeks of e-verification.
- In many cases, the refund is credited earlier.
- E-verification is mandatory; without it, the refund process does not begin.
Common Reasons for Refund Delays
- Incorrect Bank Details
- Ensure the bank account is active, correctly entered, and pre-validated
- Update bank details on the income tax portal if changed after filing
- Mismatch Between ITR and Form 26AS/AIS
- Verify that your ITR matches data from Form 26AS or AIS
- In case of discrepancies, provide feedback or revise the return
- Late Filing of ITR
- Filing close to the due date can lead to delays due to high processing volume
- Early filing helps faster refunds and reduces chances of notices
- Pending Notices or Demands
- Refunds may be withheld if there are unresolved demands or pending notices
- Log in to the portal to check and respond to any notices
- Pending E-Verification
- If returns are not e-verified, the refund will not be processed
- Always e-verify immediately after filing
Taxability of Income Tax Refund
- Refund amount → Not taxable
- Interest on refund → Taxable under “Income from Other Sources”
- Interest rate → 6% per annum (0.5% per month or part thereof)
Key Takeaways
- Always file returns early and e-verify promptly
- Keep your bank details updated and pre-validated
- Match your ITR details with Form 26AS and AIS to avoid discrepancies
- Regularly check refund status online for timely updates
If you have any further questions or need assistance, feel free to reach out to us at admin@ushmaassociates.com or info@nricaservices.com, or contact us via call/WhatsApp at +91 9910075924.
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Disclaimer: Aim of this article is to give basic knowledge about the topic to people who are not in touch with Indian tax norms. When anybody is dealing with these kinds of cases practically, he shall consider all relevant provisions of all applicable Laws like FEMA/Income Tax/RBI /Companies Act etc.