Following the attention that Finance Minister Nirmala Sitharaman brought to the income tax (I-T) department over a taxpayer's complaint regarding a delay in tax refund, chartered accountants have reported that a number of their clients are also impacted. Although the government's digital drive has aided in speeding up the tax refund process, some individuals claim they are experiencing excessive delays.
Despite impeccable documentation, chartered accountants claim that tax refunds remain stalled. We were caught off guard by the delays in a few instances. Last year, the same group of customers (taxpayers) received quicker refund credits; but, this year, the agency has not provided any notice. We looked, and everything appears to be in its proper location. According to Karan Batra, Founder and Chartered Accountant at Chartered Club, "We have found no good reason why the refund should be stuck."
Since taxpayers received the return credit in the same accounts last year, issues such as sharing incorrect bank account information cannot be the cause of these delays. Furthermore, the IT department would have informed the taxpayers if this had been the case. Approximately 5% of my clients are experiencing delays for unclear reasons. This was not a problem for them to handle the previous year, according to Batra.
The tax department's lack of reaction is what worries taxpayers and CAs. "The Central Processing Center (CPC) has issued the notification order under Section 143(1) accepting the returned income in many cases; nevertheless, the refund has not yet been paid to the taxpayers' bank accounts. Taxpayers have occasionally received notifications about invalid bank accounts even though their bank account information hasn't changed. According to Mayank Mohanka, Founder-Director, Taxaram.com "In the latter situations, taxpayers should revalidate their bank accounts and submit online refund reissue requests."
CAs believe that improved communication is necessary from the IT department. Anxiety stems from the breakdown in communication. Some worry that their returns might have come under investigation. According to Batra, all that is needed to ease anxiety is a brief notification that the income tax return (ITR) is being processed along with a suggested timeline.
Typical Explanations for Tax Refund Delays
If the information in your return differs from that in the AIS (annual information statement) or Form-26AS (tax credit statement), there may be difficulties with ITR processing and refund credit. Another significant factor that could prevent refund credit from being issued is ongoing assessment procedures. According to Mohanka, "in certain situations where taxpayers are partners in businesses, the I-T department may withhold the refund until the partnership firm's returns are processed, to ensure finality."
Then again, there might be more typical causes. One of the most frequent reasons why tax refunds get stopped is incorrectly entering the bank account information that has to be credited with the return. The IT department states that if your bank is not pre-validated, the processing of your return might not proceed. Before submitting your returns, you must finish this required process. In a similar vein, if the name on the bank account does not match your PAN information, your refund request may be denied. There will be a delay in processing if you have accidentally provided an incorrect IFSC code for your bank account or if you have closed the bank account that was chosen for the refund.
Additionally, your tax refund may be partially deducted from any taxes owed. In these circumstances, the status will state "Processed and partially refund adjusted," but the refund amount and clearance date will be stated. Then, it's possible that the full amount of the refund you requested will be deducted from your outstanding tax obligations. In these circumstances, the update "return process and full amount adjusted" will be shown. Your refund claim could potentially be rejected or there could be a failure in depositing the return to your bank account. In such circumstances, the date and reasons for the failure will be displayed. For example, the website would notify you and request that you finish the transaction after paying the Rs 1,000 penalty fee under section 234/H if your PAN is not active since it is not connected to your Aadhaar.
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