Got lower income tax refunds this year? Here's what you must know

If you filed your income-tax returns early this year – well ahead of the December 31 extended due date – you would have mostly received a refund on any excess tax paid.

And, some tax-payers have found the tax refund they have received to be much lower than what they had anticipated. “We are receiving a few calls from our clients who filed their returns, complaining about the lower tax refund that they have received,” says Abhishek Soni, CEO and Co-founder, Tax2Win.in.

Some tax consultants attribute this to the new income-portal’s e-filing utilities that come with pre-filled data related to your income – salary, dividend income, interest on fixed and savings deposits and so on. “All tax deducted at source (TDS) details are available on Form 26AS. When we file returns, we import it to our ITR, match the data and proceed. This time, a lot of this data is pre-filled,” says a senior official with a private tax return filing portal who did not wish to be named.

This seems to have triggered data mismatch in some cases. The refunds are being issued on the basis of pre-filled data.

"For example, if the deductor has deducted Rs 4,000 every quarter from your income as TDS, the total amount that should reflect in your ITR should be Rs 16,000. However, the pre-filled form displays only Rs 10,000 or Rs 12,000. This, despite the fact that Form 26AS reflects the correct figure of Rs 16,000. So, the tax refunds are being issued on the basis of the pre-filled data in ITR forms,” says Soni.

The genesis of this discrepancy could lie with the two different databases that Form 26AS and the income-tax department use, according to tax consultants. “Form 26AS data comes from NSDL, while the I-T department is now using its own database for the pre-filled ITR forms. There seems to be a lag in syncing of this data, leading to mismatch in the income and TDS information captured by the two databases. This has resulted in partial refunds for income-tax payers,” says a senior official at an income tax return-filing portal, speaking on the condition of anonymity.

However, others feel there could be another reason for the differences. “What has happened this year is that I-T is picking up data from the annual information statement (AIS). It takes into account all salary, savings, fixed deposit accounts and so on. Now, those who filed their returns early did not have access to AIS (it went live only in October). So, it is possible that they would have missed reporting some source of income, which would have resulted in lower tax paid,” explains Karan Batra, Founder, Chartered Club, a tax consultancy firm. Similar is the case with dividend income earned on their stock and mutual fund holdings. “We have seen people with multiple share trading accounts disclosing their primary account transactions, while forgetting their secondary accounts. They realise only later when we check their AIS,” he says.

If you have multiple savings accounts but have missed reporting interest earned on all these deposits, it could result in divergence in data. Many make the mistake of not reporting their savings account interest in their income tax return forms. “So, if you paid lower tax than what you were supposed to, the refund amount that you expected was higher than what it should have been. Therefore, the actual refund now credited to your account could be lower,” says Batra.

However, there could be several genuine cases of tax-payers having received lower refunds due to the new income tax return portal’s glitches. They need to utilise the recourse option provided to them on the income-tax return e-filing portal. “You can put in a request for rectification of your ITR returns. However, I feel the I-T department will take suo moto action and come up with resolutions since a large number of people are facing this issue,” says Soni.

If there is an additional tax demand, on the other hand, you can respond specifically to it.  “Once the demand is generated, you have to respond by disagreeing with it and then you can file a rectification request. It will give you two options – either reprocess the returns or change your data. If you think that you have wrongly mentioned some details and want to correct, them, you can proceed to rectify only that part of the line item,” explains Batra. If you accept the demand, you can simply agree and pay the tax.