All You Need to Know About Tax Refund
Switching jobs has now become a common phenomenon unlike the yesteryear where sticking to one job was the norm, to gain stable income. However, it is wise to be conscious about claiming your tax refund and deal with multiple Form-16 when you lose your job or switch jobs.
If you ever felt you had paid tax more than your tax liability, you can claim tax refund with an interest. Read on to know more about how to claim your tax rebate.
What Is a Tax Refund?
It is an amount given back to you by the government when your actual tax liability is less than what you already paid. You must file your income tax return within a specified period before claiming your tax rebate. The amount to be refunded is computed and shown in the tax return.
Your refund accumulates interest if the refundable amount is more than the 10 percent of the tax payable during that year. However, the interest received on the refund is taxable.
Claiming Your Tax Refund
Your employer will provide you the Form-16 before 31st of May and filing of Income tax return is done before 31st of July in every financial year. If you find your employer has incorrectly calculated your tax liability, you can claim your tax rebate while filing your income tax return. Failure to file your income tax return will make you ineligible from claiming your tax rebate.
If you have worked for more than a year in a firm and later faced job cuts, you are entitled for a decent compensation and a prior notice should be given before a month. The compensation received is taxable, however you can get a tax relief under Section 89 and rule 21 A.
Claiming Deductions: In case you have switched your job before the end of the financial year and your previous employer has not collected any deduction proofs, you can claim your tax rebate later under section 80C, 80D and 80G.
Generally, house rent receipts, medical bills, investments made under PPF, Mutual Funds, ELSS, National Saving Certificate and Life Insurance Policies can be submitted as deduction proofs for claiming tax refund.
Every employer calculates your tax liability based on your salary. Make sure to inform your new employer about your previous remuneration. Failure to furnish those details will result in additional tax deductions.
Tax refund is nothing but getting your own money back which you had paid earlier in excess as tax. Claiming your tax refund may not be necessary if you had a proper tax planning in advance