Income Tax Refund

Income Tax Refund – An income tax refund is the reimbursement a taxpayer receives when the total tax paid during a Financial Year (FY) exceeds the actual tax liability. Refunds are claimed through the Income Tax Return (ITR) and processed by the Income Tax Department under Section 237 of the Income Tax Act, 1961. Eligibility: Excess tax paid via TDS, advance tax, or self-assessment tax. Verification: Refund claims are subject to scrutiny and verification by the Income Tax Department before approval. Mode of Refund: Typically credited directly to the taxpayer’s bank account via Electronic Clearing System (ECS).

Example: If a salaried individual paid ₹2 lakh in TDS during FY 2022–23 but the actual tax liability is ₹1.5 lakh, the excess ₹50,000 can be claimed as a refund in AY 2023–24.