With the outbreak of COVID-19, the tax calendar for the year too has deviated from the normal course. Though the tax-filing deadline has been moved to December 31, 2020, the non-receipt of tax refunds is worrying those who filed their returns way back in June-July 2020. To be sure, you are entitled to income-tax refunds within days – at most months – after you file your returns.
As per the last communication from Central Board of Direct Taxes, refunds worth Rs 45,274 crore of a little over 1 crore individual taxpayers have been issued during the current financial year, as on December 14, 2020. This leads to an average refund of Rs 45,260 per person.
Also read: Income tax return filing: Why you should pay your taxes now despite deadline extension
However, the tax department has not mentioned whether all these refunds belong to the current Assessment Year of 2020-21 or earlier. An email to CBDT requesting the details remains unanswered till the time of publishing.
Readers have written to Moneycontrol stating that they haven’t received the refunds though they filed the returns early. Deepak Mishra, who filed his return on July 20, 2020, has received no communication regarding processing of return or his Rs 34,686 refund.
But chartered accountants have confirmed that some of their clients have received refunds within days of filing their returns. “There have been cases wherein the returns were filed and within three days the return had been processed and refund intimation released,” says Ameet Patel, Manohar Chowdhury and Associates.
Why is there an anomaly in the refund status for different people?
Also read: The Moneycontrol Tax-Filing Guide
Complex returns take time to process
Income-tax returns are processed based not just on the date when you file them, but also your income and the refund amount. Patel explains, “They are processing the returns in batches, even going by the type of income-tax return forms. First, the ITR 1 and 2 are processed. Also, if the taxpayer has multiple sources of income, it takes time to process returns.”
If you have low income and no refunds to claim, then your return is processed faster than someone who wants to claim a refund.
“Nil refund returns are processed faster when compared with returns where refunds are sought. While the returns with smaller amount of refunds too might be processed faster, refunds above Rs 40,000-50,000 need to follow the internal risk management procedure of the income tax department,” says Paras Savla, partner at KPB & Associates.
Confirming the trend, chartered accountant Mehul Sheth, says, “For most of my clients, the refunds of higher amounts have not yet been processed. However, those demanding a refund below Rs 10,000 have already been processed.”
The reason why some IT returns take time to process is because the tax authorities compare the details that you would have submitted with what they already have about you, which they’ve been collecting through various data mining initiatives. Dr Suresh Surana, Founder, RSM India, says, “The processing of the income tax returns is done by the Centralized Processing Centre (CPC) Bengaluru. The data analytics confirms the details filed in the Income Tax Returns (ITRs) with the income-tax department database and in case both are in conformity, the returns are processed.”
If your return has not yet been processed, there could be some mismatch in data or pending taxes for the previous year. “The delay could also be due to discrepancies in the data given in the return filed and as per the income-tax database. In such instances, the case gets referred for scrutiny assessment and outstanding dues can take more than a year to get settled,” adds Dr Surana.
Since the taxes are collected by various entities on behalf of a taxpayer and then deposited to the Government, there could be a situation where the taxes were not deposited due to COVID-19-induced lockdown. This could affect your return processing too.
Savla points out, “In some cases, the TDS has been deducted but has not been paid to the Government and so there is a mismatch.”
Check out: Moneycontrol’s Income Tax calculator 2020-21
Checking the status of your returns on the tax-filing portal helps. If an intimation has been shared, but the refunds have not been deposited in your account, like in Mishra’s case, then double-check the bank details you mentioned at the time of filing returns. Refunds are now mandatorily deposited electronically; cheques have been done away with.
Changes were incorporated in the income tax forms mid-way through the tax-filing period to include additional details of tax-saving investments made in the post-COVID extension period. Also, 800 pages of clarification were shared towards the end of November for return-filing, though the original forms were released in June and August 2020. This indicates difficulties in either filing or processing tax returns.
What should taxpayers do if their refunds are delayed?
If you find that there is a delay in the refund payment or processing of the tax returns, then there are steps you can take. “You can call the helpline number of the Central Processing Facility in Bangalore and request it to expedite the return and refund processing,” says Sheth. The helpline numbers for the CPC Bangalore are 1800 103 4455 (or) +91-80-46605200.
If that does not work, and you find no hope, then you can request for grievance redressal through your tax filing account. “If there is substantial delay, they may even prefer making an online application in the e-nivaran tab,” says Surana.
Keep a track of your return status and use the tools to request your refunds.