Taxpayers can claim a refund when their income tax (I-T) liability is less than the tax they have paid in a financial year. Refund can be claimed only by the person to whom it is due.

Should the taxpayer die or be incapacitated, a legal representative can apply for the same. In such cases, his/her guardian or legal heir is also entitled to claim and receive the refund.

How to claim a refund?

It can be claimed when filing your income tax returns. You can file late returns for only up to a year prior to the current assessment year.

For instance, if you file belated returns now, you can do so only for financial years 2009-10 and 2010-11. Refunds, if any, can be claimed only for the corresponding period. The amount is refunded by cheque or credited directly to your bank account.

The latter is possible only if the amount due is up to Rs 25,000. It could take four-five months to a year to receive the refunds.

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When can the refund amount get delayed?

It can get delayed if the Permanent Account Number (PAN) or details like name, assessment year, address, etc, are wrongly mentioned while filing returns.

Refunds can also be delayed if your returns are picked up for scrutiny by the I-T department, which can be for a number of reasons. Late filing of returns can attract scrutiny.

Also, if you are eligible for a significant amount as refund (Rs 1 lakh and above), your returns can be scrutinised.

In case the I-T department doesn't agree with the amount claimed, they do their own calculations, based on which they may revise the refund due, upwards or downwards.

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Can the refund be adjusted against other payment?

It can be adjusted if you owe the I-T department some outstanding amount for that assessment year or the previous one. The assessing officer can set-off the refund against such additional tax payable after giving due intimation to you.

Is there an interest for paying extra tax?

If the refundable amount is more than 10 per cent of the total tax payable, you are entitled to a simple interest of 0.5 per cent on that amount. However, this is forfeited if the returns are filed late.

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Is it important to file returns if there is no refund due?

Amounts paid as advance tax and withheld in the form of tax deducted at source (TDS) or collected in the form of TDS will be considered as tax paid only on the completion of the self-assessment of your income.

This assessment is intimated to the department by filing returns. Only then does the government acquire rights over the prepaid taxes as its own revenue.

Filing returns is critical for this process and, hence, has been made mandatory. Failure to do so can attract penalty.