Blog on Tax Refunds – How assessees are get tax refunds now…

Imagine a retired employee has his fixed deposits in bank and earns interest. For the
magnitude of income he gets he may fall within the tax bracket of exemption or may be
subjected to lesser tax slab rate. In such cases the assessee has to claim tax refund. The
refund has been a manual process and the assessee was not sure of seeing the light of
tax refund for few years!!! The system has changed now the refund processing is
expedited. Read on…
Tax refunds have been a matter of concern to assesses both under the Direct Tax and
Indirect taxes…
Direct Taxes
The assessee sometimes ends up paying excess tax due to TDS deduction or Tax
payment otherwise by Advance tax or self-assessment tax. In the Indian tax law unlike
say USA tax law there is no option to claim the refunds against the future tax liability.
Hence, the assessee had to wait for the refund process to happen. The earlier manual
system for the refunds involved –
 A claim by the assessee in a designated format
 Assessing officer verifying the claim with tax returns
 Taking approval from the Commissioner
 Writing to the SBI for the refund instruction
 Issuing the refund order
 Cheque/DD used to be couriered to the assessee
 Then the assessee was supposed to deposit the cheque/dd within 3 months of
its validity for encashment.

With the electronic system of tax returns processing by introducing the Central
Processing Centre, the entire sequence of the above methodology has been automated
and seldom requires a manual intervention. In fact for the 2016-17 returns that has
been filed recently by the assesee in the current year, the tax refunds have already been
issued! Hence, the tax refund system has come of age now wherein the speed of
processing refunds has played a major role in reposing the confidence of the assessee
that his refund money would not be stuck for a long time and that he can see the light in
a near future as against the uncertainties that prevailed in the earlier mechanism.

Indirect Taxes
Excise Duty, VAT and Service Tax refunds too had to be obtained by following a detailed
process of manual work by the assesses. Come GST the advantage to the assessee has
been that the tax refund process has been framed online. The application, processing,
issue of the refund by bank transfer is all planned online. The speed of the refund is yet
to be tested as the law is just 3 months old now…the system assures that an impartial
speedier tax refunds are possible under the Indirect taxes too…

Concluding Note – Under both Direct and Indirect taxes, the refund process being
automated and dis-engaging the manual intervention has lead to speedier processing of
tax refunds and the Tax department has reposed the confidence in the minds of the
assesses that their money is safe with the department and the same can be encashed
much faster compared to previous regimes.