Para 15.13 — CAM
Original Rule Text
15.13 PROCEDURE FOR INCOME TAX REFUND
15.13.1 Taxpayers can get a tax refund of their income tax if the tax they owe is less than the sum of the total amount paid. The refund process starts with the submission of claim by the assessee in annual Income Tax Returns. The taxpayer would be required to show in the Income Tax Return, the computation of his income tax payable, the total TDS which has been deducted from his income and the tax paid into the bank. The Assessing Officer (AO) determines the refund amount and approves the refund (or gets the approval of the competent authority if it exceeds his powers).
15.13.2 Procedure of refund: Refunds of tax are majorly being made through Refund Banker Scheme. Additionally, in some exceptional cases it is made by issuing Refund orders by the Departmental Officer, payment by direct credit to the tax assessee’s bank account (mentioned in his ITR) or by cheque in his favour.
15.13.3 Refund Banker Scheme: In the ‘Refund Banker Scheme’ the refunds generated on processing of Income Tax Returns by the Assessing Officers/CPC- Bangalore are transmitted to the Refund Banker (Presently SBI) for further distribution to the taxpayers. On receipt of encoded file from the Department, Refund Banker processes the refunds, pays electronically on case to case basis, and sends the refund intimation to the taxpayer.
15.13.4 In the TIN 2.0 system, the Refund Banker has been integrated directly with the TIN 2.0 of Income-tax Department through API for refund instruction transmission and reconciliation. The scheme is proposed to be implemented in two phases:
Phase-1: In this phase, refund records are transmitted to Refund Banker directly by TIN 2.0. The refund scrolls for accounting purposes are shared by Refund Banker to O/o Pr. CCA on PRAKALP as per specification agreed between Refund Banker & PRAKALP. In Phase-1 there is no change in the accounting process which is in place. Income Tax Department gives direct instructions to the Refund Banker (SBI) for refund payments. The Refund Banker after making payments sends the scroll to the O/o Pr.CCA on PRAKALP (which was earlier being sent to the CFMS system of the O/o Pr. CCA). The concerned ZAO continues to do the accounting as is being done on receipt of Payment Scroll from the Refund Banker and on receipt of the Put Through from the RBI.
15.13.5 Refund process flow
Flow Diagram -3
What This Means
When a taxpayer's total tax paid (TDS, advance tax, etc.) exceeds their actual tax liability, they are entitled to an income tax refund. The refund process begins when the taxpayer files their Income Tax Return showing the computation. The Assessing Officer determines and approves the refund amount. Most refunds are processed through the Refund Banker Scheme, where CPC Bangalore transmits refund orders to SBI (the current Refund Banker), which pays electronically and sends refund scrolls to the Pr. CCA via PRAKALP for accounting.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Tax refunds arise when total tax paid exceeds actual tax liability as determined from the ITR
- 2The Assessing Officer or CPC Bangalore determines the refund amount and approves it
- 3The Refund Banker Scheme (currently SBI) handles most refunds — paying electronically to taxpayer bank accounts
- 4Under TIN 2.0 Phase 1, refund instructions flow from TIN 2.0 to SBI, and payment scrolls go to Pr. CCA on PRAKALP
- 5The concerned ZAO accounts for the refund on receipt of the payment scroll from SBI and the put-through from RBI
Practical Example
A salaried employee files their ITR in July and shows Rs 45,000 of excess TDS deducted. CPC Bangalore processes the return, determines a refund of Rs 43,000 (after adjustment of outstanding demands), and transmits the refund instruction to SBI via TIN 2.0. SBI credits the employee's bank account electronically and sends a refund scroll to the Pr. CCA's PRAKALP system. The concerned ZAO records the refund entry in its books.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Who is the Refund Banker and what is their role?▼
Can income tax refunds be issued by cheque?▼
How is the refund amount determined?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.