What to do when your cash is stuck with the Income Tax department

When Ajay Thakker, a self employed graphic designer, filed his returns for 2008-2009, his tax deducted at source was Rs 95,000. His actual tax payout worked out to Rs 44,000. This entitled him to a refund of Rs 51,000. A year later, he is still waiting for this amount. Unfortunately, many honest taxpayers like Ajay have pending income tax refunds. Whether it's the Income Tax (I-T) department's lethargy or the growing number of tax payers, delayed refunds remain high on the list of complaints against the department. Homi Mistry, tax partner, Deloitte Haskins & Sells, says, "One of the challenges for any tax payer is getting a refund, because it is a lengthy and time-consuming process." Ideally, once you file your returns, the I-T department has to verify the information and any excess tax paid is supposed to be automatically processed and refunded. A cheque is supposed to be sent to the assessee's address in four months. The amount can also be credited to his bank account (through electronic clearing system or ECS), if he has chosen the option. However, the ECS option, which was introduced under the Refund Banker Scheme in 2007 to implement speedy redressals of refund issues, does not cover the salaried tax-payer in Mumbai, though it covers 14 other cities. The problem arises when the four-month period — as prescribed by the Central Board of Direct Taxes — stretches to, well, years. In fact, even the interest penalty (calculated at six per cent from April 1 onwards) for any delay has not helped matters. I-T officials plead not guilty. "The technical problems relating to our systems actually cause the delays. At times, wrong computation of tax or even an incorrect address can lead to delays," said an official. Since high technology fails to live up to the promise of speedy refunds, you must resort to the good, old letter-writing art, and hope the postal route (a registered post) can make up for the technical snag. But before you pick up the pen, you can go to the tax department, or NSDL-TIN (National Securities Depository Limited-Tax Information Network) websites. Alternatively, you could use the help desk of State Bank of India. Here are a few things to do: Ø       Any defective filing from your/IT's side has to be solved by a rectification letter. If the issue is cleared, you will get your pending refund. Ø       If there are no defects, you need to write a letter, along with copies of returns, to your Assessing Officer (AO), informing him. Ø       No response in 10 days? Write another one. This time, to the Additional Commissioner of Income Tax (A-CIT). Attach a copy of the earlier letter to the AO. Ø       Write another letter to the Grievance Department, with copies of letters to both AO and A-CIT. Ø       Sometimes, a visit to the officers concerned may help sort matters earlier. Ø       Cases are normally sorted within a month. If not, approach the nearest I-T Ombudsman's office. The Ombudsman will write a letter directly to the I-T Commissioner, seeking details of your case. This measure works most of the time, with results within a month or three at the most. The Ombudsman has had a record of solving about 75-80 per cent of issues till date, says an officer from there in Mumbai.