"Why you become so careless at times…," Rachna shouts at her husband Mohit on one fine morning.
"… I had told you to deposit some money in my old bank account, but you didn't care at all. Now see, my tax refund ECS had rejected as my bank account got closed."
"Don't shout Rachna, you know I don't get leave from my workplace easily. And you know well that I have a queue of work pending," Mohit argues.
The issue, in which the couple indulges, is related to the tax refund. The always cool software engineer Mohit and his wife Rachna, journalist by profession are feeling helpless now. The employers of both of them cut TDS (Tax deducted at source) from their salary. The employer of Rachna had cut more TDS than her tax liability and hence she was expecting tax refund. There are lakhs of cases every year when the taxpayer pay more than their liability. Most of them get their refund easily but the income tax department reports numerous cases, year after year, where the taxpayers do not get their money back. Shishir jha, the official spokesperson for the Central Board of Direct Taxes, says, "around 10 per cent of such taxpayers, which expect tax refund, face problems in refund for various reasons."
Any businessman or company needs to pay an advance tax, if the tax liability is more than Rs.10000. If the advance tax paid by him is greater than his tax liability, he is eligible for the tax refund. In the case of a salaried person, it is possible that the employer has deducted excess tax as the employee did not inform the employer about his investments for the financial year. Such salaried persons are eligible for tax refund.
The tax refund does not need to be claimed separately. The tax refund is automatically claimed at the time of the tax return filing, if the tax paid is greater than the tax liability. The taxpayer is given options for receiving the tax refund. Refunds are being sent in two modes- RTGS/ NECS and Paper Cheque. To enable credit of refund directly to the bank account, taxpayer's bank account (at least 10 digits), MICR code of bank branch and the correct communication address is mandatory. On the other hand, to get the refund done through a paper cheque, it is mandatory to mention the bank account number and the correct address. Any return filed in a particular assessment year with refund claims of over Rs 10,000 attracts an interest of 9 per cent per annum from April next year.
Processing of Return
For the individuals, there is a choice to either e-file or do paper filing at the respective assessing zones. Government of India has established Centralised Processing Centre (CPC) in Bangalore, which processes all the Income tax returns filed electronically across the country and all the paper filings too. In its present capacity, CPC is capable of processing 15-20 million returns.
Before the establishment of CPC, the standard time required to process I-T returns was at least 2-3 years. With CPC, the time taken to process the returns has come down to 3-4 months. On an year basis, the people are getting smarter and are filling the returns electronically but there are people who still prefer to file manually which is time consuming from the taxpayer and the authority's perspective. Gopal Agarwal, CEO, Vogue Commercial, says, "Processing takes almost one year (it may be less than this as well). It takes less time in case of a salaried person as the sources of income are clear. But it takes more time with the business persons and the companies due to various sources of income."
Status of Tax refund
After the completion of the processing, the income tax department starts refund procedure. The taxpayers can view their status of refund; 10 days after their refund has been sent by the Assessing Officer to the Refund Banker - by entering PAN and an assessment year on the website of the income tax department. The status of the refund, being paid other than through refund banker, can also be viewed at www.tin-nsdl.com by entering the PAN and an assessment Year. The refund status is also being reflected in the 'Tax Credit Statements' in Form 26AS. The Form 26AS is available on the website of NSDL from Financial Year 2005-06 onwards. It is mandatory to provide PAN along with the user ID and password at the time of login to view Form 26AS.It is not mandatory to view Form 26 AS but it is strongly recommended by the income tax department that for own benefit, one should regularly view Form 26 AS. NSDL charges for the login and password, but it can be viewed free with the website of income tax department.
When refund is not received
There are numerous taxpayers that face problems in the refund for the various reasons every year. "Wrong address, wrong MICR code, closed account etc. are few main reasons behind such issues," explains Jha. What should be done in such cases? "There are various solutions for such taxpayers. The taxpayers can contact to the call centre- Aayakar Sampark Kendra (ASK) - established by the income tax department. They can contact CPC Bangalore as well. Both the numbers are available on the website of income tax department. In addition, they can visit the office of the tax department to have follow up of the refund. They can write to the concerned Income Tax Assessing Officer with a copy of the acknowledgement of tax return filed. If the issue is still not solved, the taxpayer may write to jurisdictional Chief Commissioner of the Income Tax with a copy to the Grievance Cell and the concerned Income Tax Officer.
When A/C is closed
If one has opted for ECS mode, the tax refund can be credited directly to one's bank account. But, what if the bank account turns dormant after filing the return? If the bank account has turned dormant, the refund would be, no doubt, credited to his account. But the taxpayer would have to request the bank authorities to activate the bank account once again.
What if the bank account is closed in between tax filing and tax refund? In such a case, the ECS done by the income tax department gets rejected automatically. Hence, the taxpayer should write regarding this to the concerned Income Tax Assessing Officer with the new account number and a copy of an acknowledgement of the tax return filed.
When cheque expires
What should be done if the refund cheque expires? The taxpayer should contact his jurisdictional Assessing Officer to return the cheque. He should carry a copy of an acknowledgement of the tax return filed with him. The income tax officer may change the date mentioned on the cheque or he may issue a new cheque.
When address changes
If the taxpayer has shifted his residence, he should contact its Assessing Officer and inform about the change in the correspondence address. If the cheque of the refund is dispatched by the department and has not been received by the taxpayer, he should contact its local post office with the speed post reference number displayed at the NSDL-TIN website. In case the tax refund credit is not affected in the taxpayer's account through ECS but the refund advice has been received by the taxpayer and the status shown is paid, in that case, the tax payer should contact his bank. In case of any mistakes on the refund cheque delivered, one should submit a letter along with a copy of the refund cheque to the assessing Officer. He should retain a copy of the letter and a refund cheque with him.
When cheque is lost
What if the refund cheque is lost during the transit? "In such case, the taxpayer should fill an indemnity bond on a stamp paper Rs.100 and clearly mention that the refund cheque is lost. He should provide all the details like name, PAN, address, assessment year etc. He should submit it to his assessing officer along with the copy of the acknowledgement of the tax return filed. What if one doesn't receive his tax refund within a reasonable time, which is normally within a maximum of one year from the date of filing the tax return? The taxpayer can visit the office of the income tax department in order to have follow up of the refund. He can write to the concerned Income Tax Assessing Officer with a copy of the acknowledgement of tax return filed. But as they all say, caution is always better. Tax expert Navin Garg says, "One can easily avoid such problems while filing the return. The taxpayer should mention the particulars of the bank account, PAN, Residential Address and name correctly while filing the return to avoid further consequences."
Dealing with the problem
- If the bank account has turned dormant, the refund would be credited to his account. But the taxpayer would have to request the bank authorities to activate the bank account once again.
- If the bank account is closed, the taxpayer should write regarding this to the concerned Income Tax Assessing Officer with new account number and a copy of acknowledgement of tax return filed.
- If the refund cheque expires, the taxpayer should contact his jurisdictional Assessing Officer to return the cheque. The officer may change the date mentioned on the cheque or he may issue a new cheque.
- If the taxpayer has shifted his residence, he should contact its Assessing Officer and inform about the change in the correspondence address.
- If the cheque of refund is dispatched by the department and has not been received by the taxpayer, he should contact its local post office with the speed post reference number displayed at the NSDL-TIN website.
- In case of any mistakes on the refund cheque delivered, one should submit a letter along with a copy of the refund cheque to Assessing Officer.
- If the refund cheque is lost during the transit, the taxpayer should fill an indemnity bond on a stamp paper Rs.100 and clearly mention that the refund cheque is lost.
Another panel to recover tax dues
Government has announced setting up of yet another highlevel committee in the finance ministry to recover tax arrears. The committee is constituted by the Central Board of Direct Taxes (CBDT) to examine and suggest how tax arrears from "assessees not traceable" could be recovered. The new committee will suggest modalities for utilization of the information available with Financial Intelligence Unit and the Income Tax department for the recovery of outstanding demand in such cases. It will also examine the possibilities of engaging outside agencies to locate the whereabouts of nontraceable assessees or their assets and also unknown or undisclosed assets owned by the assessees with inadequate assets vis-à-vis the outstanding demand. A reward scheme for informants who supply information about such tax defaulters and which results in collection of the outstanding demand may also be proposed by the panel. Tax arrears have gone up to more than Rs.2.50 lakh crore. On contrary, the recovery has been very low with an average Rs.12,000 crore a year. The committee has been given two months to submit its report. After the committee gives its recommendation, the government may go public with the names of chronic tax defaulters. This is the third committee constituted by the finance ministry after it had last month announced a high-level committee headed by the CBDT chairman on black money comprising chiefs of Directorate of Revenue Intelligence and Enforcement Directorate as members; and a study on black money by leading economic thinks tanks.