The subject of income-tax refunds is a sore topic with most taxpayers. Getting refunds on time and for the correct amount from the income-tax department is a rare and much celebrated event for all taxpayers. One has been hearing from the tax department for the past several years about the electronic processing of tax returns and electronic credit of refunds, and has been assured that tax refunds will be credited within four months of filing of the tax returns. Such speedy grant of refund, however, continues to be a mirage, though the process of grant of refunds has improved considerably over the past few years. Typically, most tax refunds are now received after about two years from the date of filing of income-tax returns, against a period of at least three years in the past.
The months of January to March every year, in particular, sees a drying up of the grant of refunds, as tax authorities try to meet their annual tax collection targets for the year ending March. Refunds granted are deducted from the taxes collected to compute the net tax collection, and targets are set for net tax collections—therefore, the tax authorities’ reluctance to grant refunds during this period. One wishes that tax collection target norms were changed, and that grant of refunds is not hostage to tax collection targets, so that there is no unnecessary delay in grant of refunds.
Typically, therefore, the months of April to June represent the best opportunity to you to get your tax refund. What is the best process to go about getting the refund? Strictly speaking, once you have filed your income-tax return, you should automatically receive the refund. But as we all know, this rarely happens.
If more than a year has passed from the date that you filed your tax return claiming a refund, you should write a letter to your assessing officer (the tax officer with whom your return of income was filed), pointing out that your tax refund has not yet been received by you. This letter should contain all details such as your permanent account number, the assessment year, the date of filing of your income-tax return, the acknowledgement number under which the return was accepted, and the amount of refund. Ideally, you should enclose a copy of acknowledgement of filing of the return of income. Ensure that you obtain an acknowledgement of filing this and all subsequent letters.
In case you do not receive any response to this letter nor your refund within a month of filing this letter (and this is most likely), you should write a reminder letter mentioning thereon “second reminder” and enclosing a copy of your earlier letter. If this too does not work within a month, then you should write to the additional/joint commissioner of income-tax having jurisdiction over your assessing officer, with a copy marked to the assessing officer, pointing out that you had not received your refund in spite of repeated reminders and enclosing copies of your earlier correspondence on the subject. In most cases, you would receive the refund shortly thereafter. However, if even this does not work, after a month of filing this letter with the joint/additional commissioner of income-tax, you can then take up the matter with the income-tax ombudsman. Most people are not aware of the existence of such an ombudsman, and many who are aware of this, are hesitant to approach the ombudsman for fear of being harassed by the tax authorities. The contact details of the income-tax ombudsman at various centres are available on www.incometaxindiapr.gov.in. The procedure is also available on the website.
All you need to do is file a simple letter with the ombudsman giving details of the refund due to you, and enclosing a copy of your correspondence with the assessing officer as well as with the joint/additional commissioner of income-tax. No fees are to be paid for this purpose. The ombudsman may not even call you to discuss your application, though at times, in complicated cases, both the taxpayer and the assessing officer are called for a meeting with the ombudsman. In almost all cases, this application to the ombudsman works very effectively, and you get your refund promptly. This is on account of the fact that the ombudsman reports directly to the finance ministry, and acts through the respective commissioner of income-tax. The ombudsman grants an award, which is binding on the tax authorities.
Therefore, if you want your long overdue income-tax refund soon, get going quickly and commence the procedure in April itself!
Gautam Nayak is a chartered accountant. Your comments, questions and reactions to this column are welcome at firstname.lastname@example.org