Repayment of Taxes

Repayment of taxes refers to the refund or return of excess tax paid by a taxpayer to the government. When a person pays more tax than their actual liability through advance tax, TDS, or self-assessment tax the excess amount becomes refundable. After filing the income tax return, the Income Tax Department processes and verifies the return, and any extra payment is refunded to the taxpayer. Such repayments are generally credited directly to the taxpayer’s bank account linked with their PAN and are subject to verification by the Centralized Processing Centre (CPC) of the Income Tax Department. If there is a delay, the taxpayer may also receive interest on the refund under Section 244A of the Income Tax Act.

Example: If a taxpayer’s total tax liability for the year is ₹45,000 but ₹50,000 has already been paid through TDS, the excess ₹5,000 will be refunded by the Income Tax Department as repayment of tax.