As a responsible citizen of the country, you must pay your taxes on time. However, overpaying taxes can be detrimental to your financial health.
What is tax refund?
In the beginning of financial year, you might not be clear about how much you can invest in tax saving schemes. Your employer may deduct income tax as per your investment declaration leading to tax being deducted from your salary every month. At the end of the year, you might realise that you have paid extra income tax. The government allows refund of this extra amount.
Below are some situations where you may file for tax refund:
- You have paid more tax as self-assessment but are liable to pay less through regular assessment.
- If the tax deducted at source (TDS) by bank or employer is more than your tax liability through regular assessment.
- If you have been taxed in a foreign country (with which the government of India has an agreement to avoid double-taxation) and in India as well.
- If you have not declared some investments which provided tax benefits to you.
Tax refund can be claimed by filling Form 30 available on the Income Tax website.
It is also important to note that you can claim tax refund for up to six previous financial years as per Income Tax Department vide Circular No. 9/2015.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.