How to maximise your income tax refunds

New Indian Express

8 hours ago

The income tax return filing season has started. Filing return is a mandatory requirement for all taxpayers except those whose income does not exceed the basic exemption limit of Rs 2.5 lakh per annum under the old tax regime and Rs 3 lakh under the new tax regime. ITR not only helps the tax department calculate the real tax liability of a person, it also helps taxpayers to get a refund of taxes paid in excess of their liabilities.
There could be several reasons for a taxpayer to get a refund. When the advance tax paid under self-assessment exceeds the actual tax liability; tax deducted at source (TDS) on income such as salary, interest on securities or debentures, dividends, or other sources is higher than the tax payable; or same income is taxed twice in India and a country with which India has a tax treaty. Also, there could be situations when a correction in the assessment process leads to reduction in tax liability or you may not have reported earlier eligible investments or expenses that qualify for tax deductions.
So, while filing returns, you must take the following steps to maximise your refunds.
File on time: First, always file your return on time. Delaying it not only brings penalties but can also affect your ability to claim certain benefits or carry forward losses.
Claim all eligible deductions: Nehal Mota, Co-Founder & CEO, Finnovate, says, "making sure you are claiming all the deductions you're eligible for under the Income Tax Act—things like investments under 80C, health insurance under 80D, NPS under 80CCD(1B), and donations under 80G. These can significantly reduce your taxable income."
Rakshith H D, CFP and Head Digital Sales, GoalTeller, advises, if you receive HRA or other allowances like travel and medical, claim them with proper proofs.
Choose the right tax regime: Choosing the right tax regime is equally important. New tax regime does not allow deductions on investments and certain expenses.
Charu Pahuja, CFP CM, Group Director and COO, Wise Finserv, says one of the first and most important decisions is to choose between the old and new tax regime—an option that can directly affect your home income.
Reconcile your tax credits: Don't forget to check your Form 26AS before filing ITR. This is where you can see the tax that's already been deducted from your income—whether by your employer, bank, or clients. If they've deducted more than necessary, you can claim it back as a refund, but only if you've reported everything correctly.
Rakshith H D says don't forget to include all TDS and advance tax paid by employers, banks, or other institutions to ensure accurate refund claims.
Gather all necessary documents and report all income: Before filing your income tax return, ensure you have all necessary documents like Form 16, interest certificates, Form 26AS, AIS, and investment details to avoid missing any refund opportunities.
"Report all sources of income, including bank interest or freelance earnings, to avoid future complications," says Rakshith H D of GoalTeller
Offset losses: If you have incurred losses in stocks or property, set them off against your income to lower tax liability.
Ensure accurate filing: Filing your return early and e-verifying it through Aadhaar OTP or net banking ensures faster processing of refunds. Finally, double-check all details, including PAN, bank account number, and deductions, before submission to ensure smooth and timely refunds. Rakshith H D says, "In case the Income Tax Department requests additional information, respond promptly to avoid delays."