What is refund under income tax and what are the rules applied for it ?

Refund means ‘to repay’ or ‘restore what was taken’. Under the income-tax and other direct tax laws refund arises in those cases, where the amount of tax paid by a person or on his behalf is greater than the amount with which he is properly chargeable.

Uncle Sam may have some money for you

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How does a refund arise ?

There are several circumstances under which refunds may become due under the Income-tax Act. Examples are as follows:

(a) The tax deducted at source from salary, interest on securities or debentures, dividends or any other payment is higher than the amount of tax payable as determined on regular assessment.


(b) The amount of advance to it paid on the basis of self-assessment exceeds the tax payable as determined on regular assessment.

(c) The tax originally determined and on the basis of regular assessment gets reduced as a result of rectification of a mistake which has crept in the assessment or through appellate or revision of reason authorities.

(d) The same income is taxed both in India and in a foreign country with which the Government of India has entered into an agreement for avoidance of double taxation.

Rules relating to refunds :

Rule number of the Income-tax Rules contains is following provisions relating to application for refund:


(a) A claim for refund shall be made in Form Number 30.

(b) The claim shall be accompanied by a return in the form prescribed u/s 139, un­less the claimant has already made such a return to the AO.

(c) Where any part of the total income of a person making claim for refund of tax consists of individuals or any other income from which tax has been deducted under the provisions of sections 192 to 194, 194A and 195, the claim shall be accompanied by the certificate prescribed u/s 203.

(d) The claim for refund may be presented by the claimant in person or through a duly authorized agent or may be sent by post.

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