If you’re an Indian taxpayer, you’re probably familiar with the process of receiving a tax refund from the government. But how long does it take for the refund to arrive in your account, and what factors can affect the timeline? In this article, we’ll explore the answers to these questions based on both the official guidelines and practical experience.
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The Income Tax Department states that it should issue refunds with interest within three months after issuing the assessment order or intimation under Section 143 of the Income Tax Act However, the assessment process itself can take up to six months from the date of filing the tax return. Therefore, if you file your tax return in July, which is the last month for filing returns, you can expect to receive your refund approximately nine months later.
However, this timeline can vary depending on several factors, especially if you’re a non-resident Indian (NRI) selling property. NRIs have two options when it comes to TDS (tax deducted at source) for property sales: they can apply for lower TDS, which can save them money and reduce the likelihood of a refund, or they can pay the higher TDS and wait for a refund. If an NRI chooses the latter option, they could end up waiting for more than a year to receive their refund.
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To avoid such long wait times, NRIs are advised to plan their property sales well in advance and apply for lower TDS whenever possible. By doing so, they can save themselves the hassle of waiting for a refund, which can take up to two years from the time of filing the tax return.
If you do receive a refund, the timeline for receiving it can vary depending on the amount. You may receive small refunds of one or two lakhs in your account within three to four months of filing your tax return However, larger refunds of five lakhs or more may require approval from higher-level officers, such as assistant commissioners or commissioners. In such cases, expect a longer wait time of up to one year or more.
Based on our experience with income tax litigation, we recommend consulting with a chartered accountant or tax expert as soon as you plan to sell a property or file a tax return. By doing so, you can receive guidance on the best course of action for your specific situation and avoid unnecessary delays in receiving your tax refund.
Conclusion
While the official timeline for receiving income tax refunds in India is three months after the assessment order or intimation is issued, the actual timeline can vary based on several factors, including the amount of the refund, the type of taxpayer, and the level of approval required. To avoid delays, it’s best to plan ahead, apply for lower TDS whenever possible, and seek expert guidance from a tax professional.