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Home > Income Tax > Help Center > FAQs on Tax RefundLast Updated: Dec 07th 2023

Income Tax Refund Frequent Questions

Explains various provisions, scenarios related to Income Tax Refund, also covers the time it takes, factors that influence your Income Tax Refund!

Income Tax Refund Frequent Questions

Income Tax Refund FAQs

1.What is a Tax Refund ?

Tax refund is the amount, which the government gives back to a taxpayer who has paid excess taxes.

2.Is it a good idea to get a Income Tax Refund ?

Depends on how you see it! Yes and No.

 Good Idea: Getting money now is a good idea but not considering what was lost.

 Bad Idea: Income Tax Refund is nothing but your own money deducted during the Financial Year and refunding the excess payment during the next year (assessment year) with out any interest. It's like having your money in a Fixed Deposit account without any interest.

 Conclusion: Important to have a proper tax planning before or during the financial year to make sure you are paying the TDS or advance tax just as per the need .. not an excess amount.
3.How to claim Tax Refund ?

You need to file an income tax return to claim your tax refund. The amount of refund receivable is computed and shown in the tax return.

4.In which mode taxpayer will receive the Refund ?

Income tax department (ITD) will made refund either through electronic mode i.e. direct credit to account or through Refund Cheque. Taxpayers are required to enter correct Account number and IFSC code along with complete address details including PIN code at the time of filing of Return.

Refunds sent through cheques are dispatched to the address as mentioned by the taxpayers through Speed Post.

5.How can check my Refund status ?

To check the refund status PAN and assessment year are mandatory

To check the refund status please refer the link IT Refund Status

6.How is the interest on Tax Refund get calculated ?

If the amount of refund is more than 10% of the total tax payable for that particular year then taxpayer entitled to receive simple interest on tax refund.

Interest is computed @ 0.5 per cent per month on the amount of refund. The interest is computed from the beginning of the next financial year till the date of grant of the refund.

7.Is the refund taxable ?

The amount of refund is not taxable.

But interest received on tax refund is taxable. The rate of tax would be as per your applicable slab rate. You may include it in the taxable income of the year in which such refund is received.

8.Refund Status shows that Refund was processed through Direct Credit mode which had failed ?

It means that Refund for credit to account maintained with bank had failed. Possible reasons could be

  1. Account details are incorrect
  2. Account had been closed
  3. Operations in the Account had been stopped /restricted /On Hold
  4. The Account may be Fixed Deposit or Loan of PPF account.
  5. The Account may be NRI account
  6. The Account holder may be deceased.
  7. The bank may be merged or acquired by another bank where your bank account number was changed recently.
9.How long will it take to get the Tax Refund deposited in my Bank Account ?

While time entirely depends on Income Tax Department internal process, generally it may take anywhere 7 days to 120 days, with an average time of 90 days after you have successfully e-verified your return.

Further, few factors that would dictate your refund time

  1. Are you filing for the 1st time ever ?
  2. Are you filing promptly every year where you are required to ?
  3. Do you have past notices pending to be processed ?
  4. Have you paid taxes for the previous tax years ?
  5. Is your PAN / Aadhaar de-activated?
  6. Have you taken a Foreign Tax Credit (FTC) in the IT Return?

 As on Feb 2021, ITD implemented new Refund Processing System to enable faster Refund processing with an expected turnaround of just few days instead of few months.

Good news is that now you can track your it return, and refund easily, follow below links on this page

10.Refund Status shows that Refund had returned ?

The taxpayer may give correct bank details and raise refund reissue at e-filing portal/Assessing Officer.

Paper refund - Taxpayer may give correct details about address and raise refund issue request at e-filing portal/Assessing Officer.

If the refund failed in any other mode, taxpayer can submit the refund reissue request.

To submit the refund reissue request please refer the link IT Refund Reissue

11.Refund Status shows that Refund had been adjusted against outstanding demand of previous year. What does that mean ?

This means that Refund for the current year had been adjusted against outstanding demand of previous Assessment year either in-part or in-full. Taxpayer can check the outstanding demand details in ITD login.

To check the outstanding demands and other notices please refer the link Outstanding Demands

Useful Links related to Tax Refund

  1. Know your Income Tax Return Status whether ITD has accepted your IT Return and also to know whether you have e-verified your return or not ?
  2. Track your Income Tax Refund Status whether ITD has dispatched the check / funds into your bank account ?
  3. Get to know IT Refund related information using Income Tax Refund Guide

How to get help from

Disclaimer: This article provides an overview and general guidance, not exhaustive for brevity. Please refer Income Tax Act, GST Act, Companies Act and other tax compliance acts, Rules, and Notifications for details.