Refund rules on personal income tax

Hi,

You are eligible to receive an income tax refund when you have paid more tax to the government than your actual tax liability. This usually happens when the advance tax, self-assessment tax paid or TDS deducted of the taxpayer is higher than the total tax liability of a taxpayer.
 

If a refund is due to a taxpayer, section 244A states that interest shall be payable to the taxpayer/assessee subject to certain terms and conditions.

However, no interest is payable if the amount of refund is less than 10 percent of the tax liability.

One must also remember that interest received on the refund amount is taxable. The assessee is required to include the interest paid to him on the refund, in his gross total income while filing a return for the financial year in which he has received it.

You can also be required to pay interest on any excess refund granted by the Income Tax department

Section 234D of the Act states that if the department during the regular assessment of return finds that the amount of refund paid to the taxpayer is higher than the amount he is eligible for, then they can recover the same along with interest.
 

Also, the CA takes some fees for Tax return filing

There can be 2 conclusions to your query:

1. The CA is deducting the amount to pay back the excess refund received on your income tax return
2. They can’t charge you 10% additional fees if it is not for fees or excess return.

I hope this solves your query.

Regards,

Archit.