Income Tax Returns (ITR) should be filed by all the individuals whose income is over Rs 2.5 lakhs. However, it makes sense to file returns anyway as the documents can help you in any kind of financial transactions. For salaried individuals, whose salary is over 5 lakhs, it is mandatory to file their tax returns online. Income tax filing is a complicated but a necessary exercise.
After working so hard to make an earning, who likes paying taxes? Given the aversion to paying taxes, the government has allowed various investment avenues which not only create wealth for the investor but also help in saving taxes. By investing in these avenues, individuals can claim tax exemption on their taxable income and lower their tax liability. Moreover, even the benefits received are also tax free for most of such investments avenues. Some popular investment avenues include:
As stated above, benefits received from many investment instruments qualify for tax exemption. However, TDS might be deducted from such tax-exempted benefits. In that case, tax refunds are available to get back extra payments done through investments. Let us take a look at what tax refunds are:
- Life insurance premium paid and benefits received
- PPF and EPF investments
- 5-year Fixed Deposits
- Equity Linked Saving Schemes (ELSS)
- National Pension Scheme (NPS), etc.
A tax refund is the money paid back to you by the tax authorities when the tax paid by you exceeds your actual tax liability. Since, you have deposited extra tax due to TDS deductions, advance tax payments or due to miscalculations, any extra tax paid is returned through tax refunds.
How to claim a tax refund?
Tax refunds can be claimed when you are filing your income tax return. The process is simple and quick too. You can follow the below-mentioned steps for claiming a tax refund:
- To file your ITR, you have to fill the relevant ITR form, calculate your tax liability and file it with the Income Tax Department. When you are filing your ITR, you can compute your tax liability on the return filing website. After you furnish the required income-related data, the system calculates any tax refund you are.
- After the ITR has been filed, it would be verified by the Income Tax department.
- After verification of your claim for refund, the IT department would notify you about the result of verification of your ITR. If your tax calculation matches that of the IT department’s you would not have to pay any additional tax. Your refund claim would be accepted by the department and the amount would be conveyed to you through an email and a SMS on your registered mail id and phone number respectively. If, on the other hand, your tax calculation does not match with the department’s calculations there would be a tax demand. You would either have to pay an additional tax or your tax refund would be accepted partially. This would also be notified to you through email and SMS.
- You can also track the status of your refund before the IT department sends you a notification. To track your refund you can use any one of the following steps:
- Log into the e-filing website of income tax department, select the ‘My Account’ tab and click ‘Refund/Demand Status’
- You can also visit http://tin.tin.nsdl.com, enter your PAN number and the Assessment Year and see the refund status.
However, there are some points which you should be careful about when you file your ITR. These points include the following:
- Your bank details and PAN number should be accurate
- Your email id, phone number and communication address should be accurate
- If you are a salaried employee, make sure to check the TDS amounts in both Form 16 and Form 26AS. They should match.
- The tax-exempt deductions should be clearly mentioned as they help in lowering your tax liability and help in availing tax refunds.
- Make sure to claim your tax refunds if you are entitled to one. Follow the above-listed steps and claim your refunds easily. A word of caution though! Be careful with your details.
Source: Times Of India