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Income Tax Refunds: Where Things Stand
The Income Tax Department has processed a large number of refunds this season, but some taxpayers are still waiting. If your refund is delayed, you may be eligible for interest at 6% per annum. However, interest is not automatic in every situation.
Why refunds get delayed
- Verification or scrutiny of the return by the tax department.
- Mismatch in filed data (such as TDS credits or income details) that requires correction.
- Outstanding tax demands or adjustments against previous years’ liabilities.
- Incomplete or incorrect bank details reported with the return.
- Pending legal orders, stay or prosecution-related matters.
When interest on delayed refunds may not be granted
While the standard interest rate for delayed refunds is 6% per annum, interest is usually withheld in some cases. Common examples include:
- Refunds adjusted against an outstanding demand or tax liability.
- Refunds held up due to legal proceedings, stays or prosecution.
- Refunds pending because of taxpayer errors or incomplete documentation requiring rectification.
- Cases where the department determines the refund was not due based on reassessment.
Practical steps for taxpayers
- Check refund status: Regularly monitor the tax department’s e-filing portal or the revenant refund tracking facility.
- Correct errors quickly: If there’s a mismatch or missing information, file the necessary corrections or respond promptly to notices.
- Keep records ready: Maintain proof of TDS, tax payments and bank details to speed up resolution.
- Follow up: Raise a grievance through the department’s grievance mechanism if your refund is delayed beyond reasonable timelines.
- Seek clarity on interest: If you believe you’re owed interest on a delayed refund, request an explanation in writing from the tax authorities and retain correspondence.
Bottom line
Most refunds are being processed, but delays still occur. Interest at 6% per annum can compensate taxpayers for delays, though it isn’t granted in every case. Staying proactive—checking status, fixing discrepancies and responding to notices—helps speed up refunds and improves your chances of receiving any due interest.