Tax season is often a stressful time, but for many taxpayers, the frustration doesn’t end once the returns are filed. One of the most common post-filing headaches is the delay in receiving tax refunds. While most refunds are processed smoothly within a few weeks, some individuals find themselves waiting months with no clear answer as to why.
If you’re among those still waiting, it’s crucial to understand the possible reasons for the delay and the steps you can take to resolve the issue.
A major reason for refund delays is related to unfiled returns or issues from previous financial years. If your refund relates to an earlier year, or if you failed to file your return for that year, your refund might be stuck in the system. The tax department treats unfiled returns as incomplete, which prevents the release of any refund.
Fortunately, new provisions have been introduced that allow taxpayers to file returns for previous years under specific circumstances. This helps individuals recover old refunds, which otherwise would have remained out of reach.
Another potential cause of delay is the failure to claim carry forward losses. Taxpayers often overlook the importance of filing returns to claim losses that can be carried forward to future years. This not only delays the refund but also impacts financial planning by removing the benefit of carrying forward losses, which could have been used to offset future tax liabilities. Filing on time and accurately accounting for losses is essential to avoid these issues.
For many taxpayers, the most straightforward problem arises from missing the verification step after filing their returns. After submitting a tax return, it must be verified within 30 days, either online or by sending a signed physical copy to the tax department’s processing center. Many taxpayers overlook this critical step, which results in their return being treated as invalid. Without verification, the tax department cannot process the refund, leading to significant delays. Ensuring timely verification is one of the simplest ways to avoid unnecessary waiting.
Sometimes, the delay in refunds is not due to the taxpayer’s actions but rather disputes with the tax department. When a taxpayer is dissatisfied with a decision regarding their return or refund, they have the right to appeal. Recently introduced guidelines outline how taxpayers can appeal under Section 119(2) of the Income Tax Act. If you’re dealing with a dispute, you should know your rights and understand the appeals process. Filing an appeal can be a time-consuming process, but it is often the best way to recover funds that you are rightfully owed.
For those dealing with older refunds, new provisions have been established to make it easier to recover unclaimed amounts. Taxpayers can file an application to request special permission to submit returns for previous financial years. For refunds up to ₹1 crore, the application should be submitted to the Principal Commissioner of Income Tax in your jurisdiction. Refunds between ₹1 crore and ₹3 crore must go through the Chief Commissioner, and refunds exceeding ₹3 crore require approval from the Principal Chief Commissioner. However, these provisions are only available for refunds within the last five financial years; any refund due from beyond this period is considered lost. Therefore, it’s crucial to act promptly if you believe you are entitled to an old refund.
Another common issue arises with Tax Deducted at Source (TDS) in joint investments. In some cases, the TDS is deducted but is attributed only to one individual, even if the investment is joint. This can cause complications when filing returns, as the refund might be delayed due to incorrect allocation. The best course of action in such cases is to ensure that the TDS is properly divided between the two parties based on their share of the investment. If an error has occurred, the deductor can file a revised return to correct the mistake, which will help expedite the refund process.
The key takeaway for taxpayers facing delays is that many of these issues can be resolved by understanding the tax department’s processes and taking proactive steps. Whether the delay is due to unfiled returns, missed verification, or a dispute with the tax authorities, there are solutions available. It’s essential to stay informed about the latest guidelines and deadlines, especially for appeals or old refund claims, to prevent prolonged delays. Moreover, taxpayers should ensure that all returns are filed accurately and that any verification steps are completed promptly.
In conclusion, while tax refunds can sometimes be delayed, there are multiple avenues to recover what is owed. From filing appeals to correcting TDS allocations, taxpayers have options to resolve these issues. By staying proactive and informed, you can significantly reduce the time it takes to receive your refund and avoid common pitfalls. If you’re unsure about how to proceed, seeking advice from a tax expert may be the best course of action to ensure your refund is processed without further delays.