The Income Tax department has started sending out letters on refunds to taxpayers. Are you waiting for the letter? Well, to begin with, the processing time for tax refund is not standardised - it could be processed in just 20 days, or, in some case, it may even take up to two years.

"However, starting this year, we expect some speedy processing of tax refunds as individuals earning annual income of Rs 10 lakh and above filed their income tax return (ITR) online in 2012. All such taxpayers who are eligible for refund would have received an intimation when they filed their ITR online. Such individuals can track the status online," says Sonu Iyer, tax partner & human capital leader, Ernst & Young.

You will see the refund status displayed. The status could read 'cheque dispatched', 'cheque encashed' or 'refund cheque undelivered because of change in address of the taxpayer'. "The online status is updated for viewing only after a period of 10 days of the assessing officer having made the refund either online or by dispatching the cheque," says Vaibhav Sankla, director, H&R Block, India.

Alternatively, an individual taxpayer can also send an email for any refund-related queries. State Bank of India (SBI) is the refund manager agency for processing tax refunds, and SBI forwards all the refund cheques or online transfers on behalf of the Income Tax Department. Hence, the status of refunds can be ascertained by sending emails to SBI or calling its toll-free number, say tax consultants.

"Those who filed tax return offline can contact the SBI helpdesk at 080-26599760 or the Aaykar Sampark Kendra at 0124 2438000 to know refund status. Alternatively, an individual can follow up, preferably in person, with the assessing officer of the jurisdiction where the I-T return was filed," says Vineet Agarwal, director, KPMG India. But this process is cumbersome. If you had filed your ITR online, you will get a quicker refund as online ITRs are processed faster.

Tracking your previous dues

For previous refund dues, the taxpayer should visit the tax office for followup of refund and enquire on the reasons for it not being processed. The taxpayer may also file a letter with the respective assessing officer ('AO') with reasonable explanation, supported by documentation. "However, if no action is taken by the AO, the taxpayer can move up the hierarchy and write to the jurisdictional chief commissioner with copies of previous letter/s written to the assessing officer and with a copy of the tax return filed," says Sankla.

Modes of refund

A taxpayer can get his/her refund in either of two ways - through RTGS/NECS, which allows direct credit of the refund amount to the taxpayer's bank account, or through paper cheque issued by the Income Tax Department. For payment through RTGS/NECS, a taxpayer should have provided his/her bank account number (at least 10 digits), MICR/ IFSC code of the bank branch and the residential/official address to facilitate further communication.

"If you have opted to receive the refund by way of cheque, ensure that you have mentioned your permanent address in the tax return form. Else, if you shift from the address mentioned before receiving of the refund, the refund cheque will be returned undelivered to the tax department," says Iyer. The RTGS or NECS mode of refund is quicker and hassle-free, say tax experts.

"To ensure timely and hassle-free refund, a taxpayer should opt for direct credit as the expiry date on cheques have been reduced to three months from six months from the date of issue," says Sankla. In case of refunds through cheque, one should ensure that besides the address mentioned in the tax returns, the account details are also correct. If you receive a cheque after its expiry, you should approach the tax ward/circle concerned for re-issue of the refund cheque.

Taxpayers can, on their part, take certain steps to ensure prompt refund of dues. "Firstly, the ITR should contain correct particulars, especially the bank account number, MICR code, etc. Secondly, the taxpayer should ensure that taxes deducted/paid match with Form 26AS," says Agarwal. This will eliminate the possibility of tax credit discrepancy in the return. Also taxpayers not required to file ITR online should preferably file an e-return. This will fasten the return processing time and the grant of refund, say tax consultants.