Got tax refund twice? Here is what you should do
Last year I sold some land and paid advance tax. I was eligible for a tax refund and received it, but twice. One refund went to the bank account in which the land sale proceeds were received. Another went to the bank account where I normally receive tax refunds. I want to refund the money to the department, but I'm not sure how to proceed. My fear is that they will claw back both refunds. Another fear is that if I refund the amount, their system will not recognise the payment and tax officials will ask me to pay the money again. Meaning I will have to pay the same amount twice. What should I do?
—Name withheld on request
At the outset, you should check whether this is actually a case of a double refund received in different bank accounts, whether the amount received in the other bank account is related to some other transaction/action, or whether it is a refund of TDS by the purchaser. Income tax refund is credited only in the one bank account nominated by the taxpayer and not in any other bank account.
You can check whether there are two instances of the same amount of refund granted by logging into the income tax portal and selecting “Status of Income Tax Refund” in the filed returns tab. Each refund granted would have a unique UTR Number along with the bank account (censored) to which the refund has been paid. You can also check the amount of refund paid in Form 26AS/Annual Information System as available on the income tax portal. This will help you determine whether refund has indeed been granted to you twice and in separate bank accounts.
While returning the excess income tax refund promptly is important to ensure that there is no interest charged on the excess received, it is imperative that the amount paid back by you is correctly reflected in the system so that a demand is not once again raised for the same.
Before taking any steps for returning the excess refund due, you may also check the Outstanding Demand tab on the income tax portal to check if the Income Tax Department has already demanded the excess refund back. If there is no outstanding demand, in order to ensure that the amount paid back is correctly reflected, you may write to your jurisdictional Assessing Officer explaining the facts and asking him to pass an order rectifying the amount in the system, thereby creating a demand for return of the excess amount.
Against this new demand, you can now make the payment within the time prescribed. This may, however, be a time-consuming affair, with further interest accruing. Alternatively, you may just pay this amount for the relevant assessment year as a tax on regular assessment at the earliest, so as to minimise potential interest liability, and intimate the Assessing Officer about the double tax refund and the payment made by you.
Mahesh Nayak, chartered accountant, CNK & Associates.
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