Paying various direct taxes is mandatory by law in India. There are predefined steps involved in making payment of these taxes to distinct authorities. In many cases, individuals and businesses make errors in the tax calculation process and end up paying an amount that is higher than the tax liability. Since the authorities are not entitled to keep the extra amount, it leads to a tax refund. Income tax, being one of the most common direct taxes, is highly prone to tax refund issues. What should you do if you have applied for a tax refund? How will you check the income tax refund status? Let’s take you through the steps involved and commonly asked questions you might have in mind.
What is Income Tax Refund?
An income tax refund arises when there is a mismatch between the amount paid as taxes and the actual payable amount. This is covered under the Income Tax Act, 1961. In other words, if you paid more taxes than what you were liable to pay, you can file a claim for an income tax refund to get the additional amount back. This is irrespective of whether you paid taxes in the form of Advance Tax, Self-assessment Tax, TDS, or TCS.
After you file the claim, the income tax department will compute the taxes and validate your claim before refunding the additional amount.
In terms of a basic formula,
Income Tax Refund = Taxes paid – Total tax liability
Interesting Read: Income Tax Online Payment – Checklist and Steps Involved
How to Check Income Tax Refund Status for FY 2022-23?
To check the income tax refund status online, you must have a valid PAN and select the right assessment year. Currently, there are two different ways following which you can check income tax refund status:
- Via Income tax e-filing portal
- Via TIN NSDL portal
Steps to check income tax refund status through the e-filing portal
Step 1: Visit the official income tax e-filing portal
Step 2: Log into your account using your User ID, PAN, Aadhaar, date of birth, password, and/or date of incorporation
Step 3: Enter the captcha code that is visible on the screen
Step 4: Navigate to ‘My Account’
Step 5: Click ‘Refund/Demand Status’ and check the status of your income tax refund
Steps to check income tax refund status through TIN NSDL Website
Step 1: Visit the official TIN NSDL website
Step 2: Enter your PAN, correct assessment year, and captcha code
Step 3: Click ‘Proceed’ to check income tax refund status 2022-23
Different Types of Income Tax Refund Status
When you check the refund status using any of the methods mentioned above, you will see a certain status message displayed on the screen. These statuses vary from one case to another, and require you (taxpayer) to proceed further and get things corrected.
Let’s take a detailed look at each of these income tax refund statuses.
1. No e-filing for the current assessment year
This income tax refund status means that you either have not filed the tax return or have filed it manually. Here, you need to double-check the assessment year that you have entered to check the status. Keep in mind that the financial year 2022-23 refers to the assessment year 2023-24.
2. Under processing
This status means that the income tax department has not processed the return yet. You need to wait for fifteen days or more to recheck the refund status if it has been updated.
3. Refund issued
It means that the refund has been processed by the income tax department and settled into the bank account you provided at the time of e-filing of the income tax return. Usually, this is done by direct debit or cheque.
4. Processed with no demand no refund
This income tax refund status corresponds to multiple scenarios. It could also mean that the income tax return you filed is with no refund and there is no tax due. If that’s the case, you need not do anything else for this year.
On the other hand, it could also mean that your claim for a refund did not tally with the calculation made by the income tax department, because of which they have denied the refund. This often happens because of TDS data mismatch or incomplete/improperly-filed sections in the tax return.
In this case, you can revise the return if you forgot to include certain deductions.
- When there is a difference between the information you provided and the calculations made by the income tax department, they will send you an intimation under Section 143 (1) that explains why it has been sent. Based on the information, you can correct the errors and file for rectification to support the income tax refund claim.
- You can ask a tax professional to go through your tax notices and returns to provide proper guidance.
5. Failure of refund
This could mean that the details of the bank account you have provided to the income tax department are either not pre-validated or wrong. This might have led to the failure in processing funds. In this case, log in to the income tax portal, enter the correct bank account details (account number and IFSC code), and pre-validate them. Once this is done, apply for a ‘Refund Reissue’ from the e-filing account.
6. Case transferred to an assessing officer
Typically, this means that the IT department seeks further clarification regarding the tax return you have filed. Here, the assessing officer may want to discuss things with you for better clarity. In some cases, this income tax refund status also means that there are some past taxes outstanding with the IT department that will be adjusted against the requested tax refund.
On getting this status, you need to contact the jurisdictional assessing officer in your region.
7. Demand determined
This status means that your refund claim request has been rejected by the income tax department. Instead, the department found that you need to pay more taxes. You may also receive a notice that details the exact tax outstanding and the related reason.
Situations like this can arise because of incomplete filing of tax returns, mismatch in TDS, or withholding of income information.
To take things forward, it is important that you read the intimation received from the IT department carefully and check where the problem might have occurred. Cross-check the e-filing records to verify the information you provided. In case you find an error on your side, you need to pay the remaining tax to the IT department within the given time limit.
On the other hand, if you feel the department has made a mistake, update the information wherever necessary and file a rectification to support the refund claim.
Interesting Read: All About Tax Deducted At Source (TDS)
8. Rectification processed demand determined
This income tax refund status is only visible to the taxpayers who have received an intimation to rectify the original income tax returns. It also means that the rectified return may get partially or completely accepted. However, the department confirms that you still have outstanding tax dues and will have to pay the given amount within 30 days of receiving the intimation.
9. Rectification processed refund determined
Again, this status goes to the taxpayers who received an intimation for original return rectification. Based on the rectification, the IT department has calculated the amount to be refunded and processed the same into the linked bank account. This status is shortly followed by a revised intimation along with the refund.
10. Rectification processed, no demand no refund
In this case, the department arrives at a conclusion after processing the rectification that neither you owe any taxes nor do you qualify for any income tax refund over the taxes paid. This will be followed by a revised intimation for further clarification.
Interesting Read: Income Tax Refund 101: A Complete Guide
How to claim an income tax refund?
You need to first file the income tax return and declare the true income, deductions, and tax amount paid to the Income Tax Department. Keep in mind that online ITR filing is a must to claim an income tax refund.
I missed filing the tax return by the due date. Is it possible to claim a refund in this case?
In general, the deadline to file ITR for non-audit cases is the last of July in the assessment year, i.e., Jul 31, 2023. However, if you won’t be able to file the taxes by this deadline, you can file a late return (belated return) by Dec 31, 2023. This belated return can help you claim the tax refund if any.
I have filed the ITR timely but haven’t received the refund. What can be the reason behind it?
If you do not receive the refund timely, it can be because the return may not be processed yet. Once it is processed, the refund will be initiated. In many cases, this also happens after the return has been processed but the IT department has calculated zero refund.
The income tax refund status shows ‘Refund Failure’. What is to be done now?
In this case, you need to raise a refund reissue request by logging into the income tax portal. The refund will be processed if the bank account has been pre-validated.