tax Archives -

Travelling Abroad? Be Ready to Pay More From July 1, 2023

Sun, 25 Jun 2023 14:19:11 +0000

With a Raised 20% TCS Burden

The Buyt Desk

As per the new announcement in Budget 2023, the Tax Collected at Source (TCS) on foreign remittances, including bookings for tour packages, will rise 4 times from 5% to 20%. From July 1, 2023 you will have to keep additional money ready for the new “20% TCS” rule. An air ticket costing you Rs 50,000 will increase by additional Rs 10,000 with 20% TCS.

What is 20% TCS ?

TCS or Tax Collected at Source is basically a tax that sellers collect for their selected products and services from the customer. In terms of Foreign Remittance Transactions, it is the tax gathered from an individual making foreign transactions. Here, foreign transactions include sending money to a person, shopping and purchasing any asset, making an international trip, and more.

It is one of the new changes to the world of taxes for foreign transactions. The central government has notified changes of rules under the FEMA (Foreign Exchange Management Act), making 20% TCS a recent amendment. Indian citizens can transfer up to $250,000 in a financial year abroad, without the need for central bank approval.

Before the Union Budget 2023, the investment under the LRS beyond INR 7 lakh transaction value came under 5% TCS, applicable up to June 30, 2023. According to a recent amendment, all such foreingn currency transaction will come under 20% TCS from July 1, 2023. The Ministry of Finance clarified that foreign spending up to INR 7 lakh made through international credit or debit card will be exempted from TCS after June 30, 2023. But if the payment is done via online banking the entire payment with no minimum threshold will attract the increased TCS. The expenditure on education and medical treatment is exempted from higher TCS.

Can 20% TCS Be Claimed Back?

Yes individuals can file their income tax return and if TCS deduction is in excess of the tax liability then this amount will be refunded. But be prepared for a larger outgo when you spend in dollars, possibly blocking funds for many months until they get their return or claim the refund, and the gathered tax is adjusted. Taxpayers must track the TCS entries in Form 26AS.

Why is government levying this tax?

TCS is an advance collection of tax on expenses incurred by an individual. The rationale behind this move is to track whether the person making high value foreign remittance reflected proportionatelyin their income tax return or not.

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How to Choose Between The New and Old Tax Regime?

Wed, 15 Feb 2023 18:07:17 +0000

The Buyt Desk

The new budget for 2023 was not ordinary. Several announcements have been made by Finance Minister Nirmala Sitharaman that will change the way you pay your income tax. The dual tax regime continues and the new tax regime has been made more attractive. People claiming several deductions would want to stick to the older tax regime but if they chose the new tax regime they will have to let go of all the deductions. Whether or not the new tax regime is worth considering will be based on an individual’s income level and totally claimed deductions. They will have to sit with a calculator and consult CAs (charted accountants) to determine which tax regime will reduce their tax outgo.

Who could benefit from the new tax regime?

As mentioned above, its answer mostly depends on taxpayers’ income levels and the deductions they claim. The higher the deductions such as Section 80C, home loan interest deduction in Section 24B, and 80D benefit on health insurance premiums the less pretty the new tax regime will be. That’s because the tax breaks minimize the taxable income payable under the old regime. An individual can claim a tax deduction of Rs 4.25 lakh under the old regime.

Under the new tax regime, effective tax rates have been reduced from 42.74% to 39%, at par with people having between Rs 2-5 crore incomes. Individuals in the highest tax bracket of more than Rs. 5 crores can benefit the most. For example, if your annual salary is Rs 5.5 crore, it will save you around Rs 20.2 lakh annually by moving to the new tax regime, reduced exemptions tax regime, as per EY India post-budget calculations.

People with middle net-worth who claim several deductions under section 80C, 80D amounting to a minimum of Rs 4.25 lakh would find the old regime more attractive.

For example, if your gross total income is Rs 11 lakh, you will have to pay Rs 20,800 extra when you move to the new tax regime. The reason is that your total deductions of Rs 4.25 lakh will reduce the taxable income under the old tax regime.

But if you claim no deduction through your investments then the new regime will suit you more. Let us assume that you get complete exemptions and deductions of just Rs 2 lakh. You’ll find the new regime more beneficial according to Deloitte India calculations.

You can select either of the tax regimes if your earning are Rs 16 lakh, Rs 60 lakh, or Rs 2.2 crore without affecting your tax outgo, as per EY India. While the new tax regime might be advantageous due to the comparatively less compliance burden it demands. When you were to claim higher deductions, it could go in the old regime’s favor.

Exemptions available under the new regime

Well, the new tax regime is not completely free from exemptions. Although it has done away with approximately 70 exemptions and deductions under the old tax regime, some advantages are still provided.

For instance, if your employer makes up to 10% of your salary to your NPS (National Pension System) corpus, you can get it like tax relief under Section 80CCD (2).

Under Section 10(10D), maturity proceeds of life insurance plans are tax-free under old and new tax regimes, related to situations. However, this advantage is not allowed for Ulips (unit-linked insurance policies) where the annual premium goes more than Rs 2.5 lakh. Maturity proceeds of non-Ulip policies where the annual premium is higher than Rs 5 lakh will not be entirely tax-free. The purpose is to limit the tax benefits on maturity proceeds for high-income salaried people.

Now the new tax regime is laced with a standard deduction of Rs 50,000 which was not so earlier.

When do salaried people need to make this decision?

The new tax regime is the default tax system. It means that it will be the automatically chosen tax regime that will reflect in the system but if you want to opt for the old regime you will have to select it. A salaried person will have to make this decision at the start of the financial year. They must show their choice of the tax regime to the administration team of their employer in April when filing the proposed investment declaration. If you want to choose the old tax regime, you will have to specify this to your employer. But, they can freely change this decision at the time of filing income tax returns due in July.

The new tax regime declared in Budget 2020, provides reduced exemptions, but comparatively lower rates than an older regime, which keeps on co-existing.

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How will Cryptos Taxed?

Tue, 26 Jul 2022 04:21:38 +0000

The Buyt Desk

The Budget 2022, levied a tax on virtual assets including crypto assets and non-fungible tokens (NFTs).

In Budget 2022, Finance Minister Nirmala Sitharaman introduced the new regulation where tax deducted at source (TDS) at 1 per cent is applicable to payments made on transfer of virtual assets. The Central Board of Direct Taxes (CBDT) has issued detailed guidelines on the same. It has been said that all parties should adhere to the timelines and report every virtual digital asset transaction to the tax authority. Even the date of the transaction and the mode of payment should be clearly specified.

What is Section 194S under Income-tax Act, 1961?

The new section is introduced under Income-tax Act, 1961 which is Section 194S. This section dictates that a person responsible for paying any sum to any Indian through the transfer of a virtual digital asset (VDA) must deduct 1% of an amount transferred as income tax From July 1, 2022, Crypto asset is charged TDS as per IT dept guidelines. x from now on. It also says that the tax deduction should happen at the time of the amount credited to the account or at the time of payment, whichever is earlier.

Which account will the tax be deducted from?

CBDT guidelines say that when tax is deducted by the buyer under Section 194S of the Income Tax Act, the seller need not deduct the tax on the same transaction. The TDS needs to be deducted either from the seller or buyer account and not both. To make sure that it happens at only one end, the seller can ask for an undertaking from the buyer about the deduction of tax. The TDS collected under section 194S must be paid to the central government within 30 days from the last day of the month where TDS was collected. The party who deduces the TDS should give a TDS certificate to the payee and this should happen within 15 days of paying it to the central government.

What will happen if transactions happen through Exchanges?

The exchange will deduct the tax when the transaction happens through them. It will become difficult for both the seller and the buyer to deduct tax on transactions happening through exchanges. So the CBDT has given a simple solution by asking the exchange to deduct the taxes on VDA transactions. The exchange has to maintain the trail of VDA to VDA trade transactions and evidence of deduction of 1 per cent of TDS on the transaction amount.

Is there any case of tax exemption?

The CBDT says that under the below cases the TDS is not deducted.

When the amount paid (single transaction or aggregate) by the ‘specified person’ (buyer) is within Rs 50000/- during the financial year
When the amount paid (single transaction or aggregate) by any other person/ other than ‘specified person’ is within Rs 10000/- during the financial year

Under Section 194S of the Income-tax Act, the TDS deduction applies only if the value or aggregate value of the VDA transaction is beyond Rs 50000/- in that financial year and only if consideration is paid by the specified person. For not paid by the specified person then TDS is deducted only when the value of the VDA transaction is beyond Rs 10000/- in that financial year.

Who is a specified person?

A specified person is an individual or Hindu Undivided Family (HUF)

who does not have any income under the head ‘profit and gains from business and profession’.
who has income under the head ‘profit and gains from business and profession’ but the total sales/ turnover / gross receipts from business does not exceed Rs 1 crore.
who has income under the head ‘profit and gains from business and profession’ but the total sales/ turnover / gross receipts from profession does not exceed Rs 50 lakh.

These income and profit limits are considered in the financial year immediately preceding the financial year in which VDA is transferred.

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How To File Income Tax Return When You Have More Than One Form 16 in a Financial Year?

Thu, 07 Jul 2022 15:20:11 +0000

The Buyt Desk

Salaried people need Form 16 from their employer to file Income tax. If you change jobs in a financial year you will have more than one form 16 from your employers.

For the financial year 2021-22, July 31, 2022, is the last date to file income tax returns (ITR). This is the current deadline and can be extended by the Government. This timeline is for individual taxpayers who do not need accounts auditing. All employers need to have their Form 16 from their employers by June 15, 2022. So that they will have a fortnight of time to file their taxes. The employer must also issue the TDS certificate if there is a tax deduction on salary during the financial year.

What is Form 16?

Form 16 is a kind of Income-tax form. It is a certificate that the employer provides which has details of the salary and TDS of the employee. It has 2 parts where the first part contains details of the employee and employerfile income including their PAN, TAN, name, address, TDS and more. The second part of Form 16 is the financial details including income, allowances, deductions, salary paid, taxable income, tax to be paid and more. This is information of a financial year and issued yearly by employers at least 15 days before the last date to file individual taxes.

When will one have more than one Form 16?

During the financial year, an individual may switch jobs and may switch to any number of companies. In such scenarios, an individual will have a form 16 each from every employer he or she has worked for. While filing an income tax return, individuals will need Form 16 from all employers as only with this the total TDS, total tax exemptions on HRA, LTA and total taxable income can be calculated.

How to file your ITR when you have more than one Form 16?

Now let us look into a step-by-step guide on how to file your ITR if you have more than one Form 16.

The first step would be to collect Form 16 from all employers you have worked with the previous financial year.
Then consolidate all forms to get the gross salary earned by you (add gross salary from each form 16) during that financial year.
Similarly calculate the amount of exemption that you can claim for your income like leave travel allowance (LTA), house rent allowance (HRA) etc.
Now calculate the total HRA, LTA etc by consolidating all form 16s. Use online calculators to know your claim eligibility.
Also, you are eligible for a standard deduction of Rs 50,000 from your salary income. If all form 16 mentions this, then you can consider it only and the rest will be taxable.
Next is to claim deductions under sections 80D, 80C etc.
Now you can arrive at total taxable income which is your salary minus deductions, interest earned and income from other sources. And if you have opted for a new tax regime, you will not be eligible for most of the tax exemptions and deductions.
The next step is to calculate the income tax liability.
Then consider TDS from all Form 16 to know the tax already paid. Cross-check the same with Form 26AS and AIS (annual information statement).
Now the final step is to calculate the tax payable based on the total taxable income, total TDS and the income tax slab.

What to do when you do not get Form 16 from all employers you worked with in the FY?

There is a possibility that you have received Form 16 from one of your employers and not from the rest. In such cases, you need to have salary slips from employers who have not given Form 16. For these salary slips, you need to derive all values as needed by the ITR form. You need to have a clear break up of salary. Now that you have values from all employers, you can calculate the total gross salary which is the summation of Form 16 and salary slip values. Now follow steps 3 to 10 as mentioned above. That means calculating total deductions, total exemptions, total income from other sources, total taxable income, tax liability, total TDS and finally tax payable.

What to do when you do not get Form 16 from any employer?

Irrespective of Form 16 received from the employer, an individual should file his/ her Income Tax Returns. When Form 16 is not available, the Salary slip will do the work. Break the salary from all salary slips to get different values. Now calculate the total gross salary, total income from other sources, total deductions, total exemptions, total taxable income, tax liability, total TDS and finally tax payable as discussed above. Do not forget to consider the income tax slab based on the income tax regime chosen. Also, make sure that the TDS reflected in your salary slips is the same as that in Form 26AS/AIS.

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Did You Know that Specific Donations Can Lighten Your Tax Burden?

Tue, 28 Jun 2022 04:32:40 +0000

The Buyt Desk

Not all donations can be claimed under Section 80GGA of the Income Tax Act. It has specific terms and conditions to claim donations made in the assessment year.

In India, there are two fields that need constant financial aid for development which are rural growth and scientific research. Not many contribute or donate funds to these fields but most donations are for religious purposes in India. There are very few who extend financial assistance to scientific research in India. To encourage Indian citizens to donate more such donations, the Government of India offers tax exemptions on donations made towards scientific research and rural development under Section 80GGA. Section 80GGA of the Income Tax Act has a narrow scope with terms and conditions.

What is Section 80GGA of the Income Tax Act?

Section 80GGA of the Income Tax Act provides tax exemption on charity /donations made towards scientific studies and rural development. Donors can enjoy tax benefits for supporting these noble causes. Government appreciates donations made for boosting scientific research in the country and Section 80GGA is a gift the donor gets. Though this section encourages individuals to contribute financially to science, it has few strict restrictions and rules.

Who is entitled to claim tax deduction under Section 80GGA?

Any individual making donations for scientific research and rural development is entitled to claim a tax deduction under Section 80GGA but he/she should not have a business or profession. For individuals owning a business or an enterprise, it is Section 35 of the Income Tax Act for tax deductions. Before filing income tax returns, for details of particular terms of different sections, do check the official website of Income Tax. Also, look for all deductions under section 80GGA.

What are the deductibles under Section 80GGA?

All types of donations are not covered under Section 80GGA of the Income Tax Act. But only in specified areas, and limited donations are deductible. One can make only one claim per assessment year.

Donations made towards associations that train rural youths or residents
Donations made towards afforestation and rural development fund
Donations made towards institutes /associations that adhere to Section 35CCA and participate in rural development programs
Donations made towards research / social science /statistics done at colleges/ institutions /associations
Donations made towards the National poverty eradication
Donations made towards research universities/ associations /institutes work as per rules prescribed under Section 35(1) (ii)
Donations made towards schemes or projects approved under Section 35AC undertaken by local authorities or public sector companies

What are the applicable payment modes and deduction limits under Section 80GGA?

100% deductions can be claimed on donations made under Section 80GGA and the maximum amount is not set to make donations. The maximum cash donation that can avail of the tax deduction benefit is Rs 10000/- but through other forms, there is no limit. The donation made through demand draft, cheque and cash is acceptable. To claim 100% deductions for donations above Rs 10 thousand, one must donate through a cheque or demand draft.

What documents are needed to claim deduction under Section 80GGA?

Individuals should submit necessary papers that authenticate the donations made. Either a cash receipt or cheque receipt should be submitted as proof. This receipt should have an income tax department-approved registration number. It should be stamped by an authorized trust and have details like the donor’s name, address, donation amount and name of the trust to which the donation is made.

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How to Take Maximum Benefit of All The Income Tax Deduction and Save More Tax?

Thu, 02 Jun 2022 17:32:21 +0000

The Buyt Desk

Not many know that there are other ways to get tax exemption other than section 80C of Income tax. The Income tax act has many provisions for tax exemption.

As you grow in your career and your earnings increase, your tax slab also increases. Every time you will be paying taxes higher than the previous year. Your tax liability increases year on year as you get promotions and increments. So you need to reduce tax burden by opting for some tax exemptions. There are many ways tax savings can be done. The Income tax act has described many exemptions under various sections. The one that many know is section 80C of income tax act. And there are many who think that this is the only section where taxpayers can save his/her money.

Under section 80C of the income tax act, one can get tax exemption up to Rs 150000/-. Similarly, of up to Rs 50,000 or more in some cases can be saved under section 80D by buying health insurance for self and family members. . Both individuals and HUFs can get benefits under 80C and 80D. Major tax-saving provisions for the common man are under 80C but there are other tax saving options besides Section 80C. Let us look at the alternative tax saving options other than Section 80C.

What are effective ways of saving Income Tax other than Section 80C?

Section 80D – Health insurance premiums

Taxpayers can save tax on the premiums paid towards health insurance. Even the amount spent on healthcare and medical treatments can get you tax deduction. The income that is spent on ensuring the health of taxpayers and his /her family can get a tax deduction under Section 80D, Section 80DD and Section 80DDB. The deduction amount may vary for every individual as the policy is bought. For taxpayers who are senior citizens, the limit is Rs 50000/- and for the rest, it is Rs 25000/- per annum. If a taxpayer is paying both his /her policy premium along with senior citizen parents, then he/ she can get a combined deduction of up to Rs 75,000/- per annum. When both the individual taxpayer and his /her parent are above 60 years old, the deduction up to Rs 1 lakh can be claimed.

Section 80E – Interest paid on education loans

Income tax is exempted on education loan interest paid. You can save tax when you go for an education loan for higher studies for yourself, your spouse or your kids. Section 80E of the Income-tax act permits individual taxpayers to avail of deduction. This benefit can be used either by the parent or kid, whoever is repaying the loan. But the education loan must be from registered financial institutions and not from friends and family.

Section 10(10D) – Payouts from life insurance plans

The amount of sum insured including any bonus that is paid on the death of the insured or on surrendering a policy or on the maturity of the policy is completely tax-free under Section 10(10D) of the Income Tax act. The nominee who receives the policy proceeds and sun assured need not have to pay tax for this amount received. As per Section 10(10D) of the Income Tax Act, 1961, the tax saving can be claimed on funds received through a life insurance plan, including maturity benefit, death benefit and the bonus received. But these have certain conditions to be fulfilled.

Section 80(G) – Donations and Charity

Tax exemption can be claimed on the donations made towards the National Relief Fund. Even charities made towards organizations for social causes can be claimed for tax benefits. The organizations receiving donations should be listed with the Ministry of Finance and have an 80G certificate, for the claims to be made. The purpose of the money is used by the organization to decide if the deductions will be allowed or not. For any claim above Rs 10000/-, the donation should be in the form of a cheque and not cash. Cash donations of only up to Rs 10000/- can be claimed. The citizens of India can save money on tax by claiming deductions for donations made under Section 80G of the Income Tax Act.

Section 80CCD – Investment in National Pension System

National Pension System (NPS) is where you invest in equity and debt pension funds to build a retirement corpus. One can withdraw funds from NPS only after retirement at age of 60. An amount of up to Rs 1.5 lakh deposited in an NPS account is tax exempted under Section 80CCD(1B) of Income Tax. This can be availed by all private and government employees, except for the armed forces.

Section 80GG – Rent paid

You can avail of tax deduction on your rent paid if you are salaried and have an HRA component by your employer. If there is no HRA component but you are still paying rent, the same can be claimed for tax deduction under Section 80GG up to Rs 60,000 per annum. This section can be utilized by self-employed and salaried workers who have no HRA component.

Section 24(b) – Interest paid on home loans

When you buy or build a house for self occupancy, you can avail of tax benefits on the interest paid on the home loan. You can claim tax deduction per annum up to Rs. 2 lakhs interest paid under section 24 of Income tax. And when the house is not for self occupancy, there is no limit on the deduction on the interest paid on the home loan. The principal paid towards the home loan is deductible under section 80C.

Section 80EEA – Interest paid on home loans by first time home buyers

Section 80 EEA under Income tax act, there is an extra benefit for first time home buyers. An additional deduction is available apart from section 24. An additional deduction up to Rs. 1.5 lakhs can be claimed under section 80 EEA. The only condition to avail of this benefit is that the property’s stamp duty value should not be more than Rs 45 lakh.

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High-Value Transactions Watched By The Income Tax Department

Thu, 05 May 2022 14:34:01 +0000

The Buyt Desk

Almost all high-value transactions are reported to the Income Tax Department by the financial entities when the value surpasses the specified threshold limit. The Income Tax Department has agreements with all the financial institutions and many government entities so that the department can access the financial information of all the taxpayers. Every high value transaction is tracked and the same is checked with their IT returns. If the person fails to mention the same in his /her Income Tax (IT) returns then they will get the notice and have to pay a penalty to the tax department.

The IT department has set some upper limit for transactions and anything that crosses this limit is called a high value transaction. Anyone doing such a transaction is likely to get IT notice from the department. Because every high-value transaction is notified to the IT department. It keeps a close watch on an array of bank transactions, mutual fund investments, cash-related activities, brokerages and property registrations.

Let us understand a few high value transactions in detail.

High-Value Cash in Fixed Deposit

Any cash deposits in bank Fixed Deposit that exceeds Rs 10 lakh is considered a high value transaction and the same is reported to the IT department. The Central Board of Direct Taxes has dictated banks to reveal the transactions of individuals when he /she has one or more fixed deposits in the bank that exceeds Rs 10 lakh. If you are a bank depositor keep this in mind and mention the transaction in your IT returns because they already know it.

Cash Deposit in Savings Bank Account

The IT department may serve you an income tax notice if your savings bank account has deposits exceeding Rs 10 lakh during the financial year. The limit set for savings Bank Account is Rs 10 lakh during a financial year and Rs 50 lakh for Current Accounts. Any transaction crossing these limits is revealed to tax authority by the banks.

Paying Credit Card Bills

The Central Board of Direct Taxes has stated that any cash payments of Rs 1 lakh or more towards the credit card arrears should be reported to the IT department. Also in a financial year if the payment towards the credit card settlement is Rs 10 lakh or more, the same needs to be reported to the tax authorities. Your credit card is linked to your PAN and the IT department tracks your credit card transactions. Never hide any transaction in your IT returns as they already have your details. You should be concerned about the income tax that applies to credit card transactions and don’t go overboard with your credit card spending limit.

Purchase or sale of an immovable property

Any purchase or sale of immovable property that amounts to 30 lakh and above should be reported to tax authority by property registrar. While filing IT returns the buyer or seller should specify the same in 26AS form. The IT department cross verifies every high value transaction on an individual’s IT returns and if the same is not reflected then he /she will get IT notice.

Cash transactions related to Shares, Debentures, Mutual Funds and Bonds

Any transaction for purchasing bonds or debentures of Rs 10 lakh and above in a financial year is to be reported to tax authorities by institutes that issue bonds or debentures. And the same applies to stocks and mutual funds too. The IT department has a mechanism to track high-value transactions done by taxpayers and it is an Annual Information Return (AIR) account of financial transactions. Using this tool, they keep track of all unusually high value transactions in that fiscal year. So people investing in stocks, debentures, bonds or mutual funds must take care to not cross mark of Rs 10 lakh and if they do then they must verify the AIR segment of Part E of 26AS form for all the high-value financial transactions.

Sale of foreign currency including cost of foreign exchange

Any individual who is selling foreign currency should not sell for Rs 10 lakh or more in that financial year to be away from IT radar. Also notify the IT department of any credit through an insurance or credit card or debit card of traveler’s draft or cheque, or other instruments in foreign currency.

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Dos and Don’ts Of Income Tax’s AIS

Sun, 02 Jan 2022 09:25:42 +0000

The Buyt Desk

The income tax department of the Government of India rolled out a new feature in its portal Annual Information System. It shares a comprehensive view of taxpayers’ data.

The data consist of information related to interest income on saving bank account, dividends, security transactions, overseas remittance data and mutual fund transactions.

To give a seamless experience to AIS users, the income tax department has shared some Dos and Don’t’s which taxpayers should follow while using this facility.

The department shared this information in a tweet and mentioned, ‘Caveat! There are some Do’s and Don’t’s which taxpayers should observe to have seamless experience within the AIS utility’.

The Dos of Annual Information System For Taxpayers

Always use the latest version of the AIS utility
Share suggestions on the knowledge that AIS displays
Check AIS regularly
Verify tax information summary (TIS) values used for prefiling of returns
Use the AIS utility to verify

The Don’ts Of Annual Information System

Do not use the old or outdated version of AIS JSON.
Do not enter wrong suggestions in the AIS database.
Never share your e-filing details with anyone.

The taxpayers can access the AIS by clicking on the link “Annual Information System AIS’ in the Service category in the new portal of the income tax department.

The portal has added a new facility that offers an online feedback facility to the taxpayer. If the taxpayer finds the information in AIS inaccurate or erroneous they can immediately provide feedback on the same. They are allowed to modify the information value and provide customized feedback in the info category.

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Your Wait for Income Tax Refund Could Get Longer

Sat, 21 Nov 2020 10:36:01 +0000

By Priyanka Sambhav

You have not yet filed IT return since the deadline has been once again pushed further to 31st December 2020 then you must do so now. There is no point in waiting till the last minute, especially if you have a pending refund. Many taxpayers have already filed their return for AY 2020-21 i.e. FY 2019-20 quiet ahead around June-July but are yet to get their refunds. The refund is delayed as the Income Tax department is undergoing a technical upgrade. The official Twitter handle of Income Tax department said in a tweet, “As part of our commitment to provide improved taxpayer services, we are moving to a new, technologically upgraded platform(CPC 2.0) for faster processing of ITRs. ITRs for AY 2020-21 will be processed on CPC 2.0. We thank you for your patience while we migrate to the new system.”

A refund gets processed within 20-45 days after the processing of your return but this is an ideal scenario. Usually, taxpayers wait can stretch to months. The refund claim of up to Rs 5 lakh gets directly credited to the bank account. When a taxpayer is eligible for a refund, he/she needs to ensure the following-

If you owe tax to the department as per previous year’s computation
You may be asked to give additional supportive department explaining your claim so keep an eye on your mail and respond to it as soon as possible
Cross-check your bank account number

Expert feel that delay in tax refund is nothing new and technical upgrade is just one of the reasons. Tax Expert & Founder KCC group Sharad Kohli says, “The mystery behind tax refunds has been baffling taxpayers from times immemorial. Despite the technology-driven initiative refunds for many taxpayers still prove to be elusive. However, little do the taxpayers know the reasons behind this delay can be many and genuine too.” According to Sharad Kohli, under the current scenario where returns are being processed electronically, a refund can be delayed due to one of the following reasons-

1. Filing an unverified return

2. Filing a belated return

3. An outstanding demand in any of previous years

4. Mismatch with 26AS

5.Mentioning incorrect bank details

6. Filing return in a form not applicable to the taxpayer

7. Pending reply to a notice

8. An error in compiling the return

9. Error in tax computation

10. System upgrade at the department’s end

11. Fiscal limitations

This year has been a year of exception, delays are inevitable. The due date has seen two extension and due to lockdown tax collection has been slow and subdued as well. Meanwhile, if you can check the status of your refund on income tax e-filing portal (www.incometaxindiaefiling.gov.in) or National Securities Depository Limited (NSDL) website, log in with your PAN number go to the ‘View e-Filed Returns/Forms’, ‘My Return’ page will open and show the status of your filed return such as ITR filed, verified, ITR processing, issue of refund or status of the refund.

Here is a link to a previous Thebuyt.com’s article where CA Mayoor Kapur has explained how you can check the status of income tax refund. Click for details-

HOW TO CHECK INCOME TAX REFUND STATUS

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