How Long Does It Take For Tax Refund Direct Deposit To Clear (And Why)?

Exact Answer: 5 – 10 Days

Income tax refunds get delayed when the income tax department raises any clarification or query. One can easily check the status of one’s income tax refund on the website of the income tax department or NSDL in India. Though the income tax department tries its best to make income tax refunds on time they are delayed numerous times due to a variety of reasons.

A taxpayer is worried about whether he will get his tax refund on time or not. However, one should not get worried in such circumstances as the IT department ensures that all tax refund direct deposits clear within at most 10 days.

How Long Does It Take For Tax Refund Direct Deposit To Clear?

The IRS makes sure to process the tax returns as soon as it is received. When one files his returns electronically this process gets even faster and easier. The direct deposit refunds get processed faster and thus are cleared quickly. The direct deposits are processed within 7 – 10 days of receiving the tax return. On the other hand, a paper check for tax returns can take about 2 weeks to 1 month to get processed and cleared. Filing a paper tax return can delay refunds by several weeks.

One should also remember that it might additionally take a few days more for one’s financial institution to make the tax refund deposit available to them. It might also take several days for the refund to arrive by check in the mail. The IRS states to allow for 5 additional days for the refunds to get available to a person.

In almost all cases, a direct deposit will ensure to clear the tax refunds more quickly in about 5 to 10 days. In certain cases, refunds by direct deposits are available immediately and instantly.

Why Does It Take This Long For Tax Refund Direct Deposit To Clear?

Tax refunds are issued about a month after the process of an income-tax return is processed. Normally, refunds are processed within 20 – 45 days from the completion of the processing of ITR by the income tax department following the centralized processing center. However, a taxpayer who is eligible for a refund claim of up to five lakh can get a direct bank credit in form of direct deposit to the bank within 5 to 7 business days from the date of issuance of the refund.

Tax Refunds can unnecessarily get delayed due to a multitude of reasons but one of the main reasons for such delay is the need for clarification or query by the department. Refunds can be kept withheld by the IT department if the income tax filing for the ongoing assessment for the relevant assessment year has any discrepancies or if when the ITR filed and details available with the department don’t match. Thus, one should always ensure to file true information every time.

One should also keep on checking their mail regularly to check whether one has received any mail for clarification or query from the tax department. If one has, respond immediately to avoid any hassles and delays in the future. Tax refunds could get rejected due to simple mistakes like furnishing erroneous back account detail in the IT form.

Conclusion

There can be a plenitude of factors that can slow down the clearance of tax refund direct deposit. Errors, incorrect information, frauds, incomplete returns, etc can all contribute to refunds’ slow processing. Also the financial institution’s efficiency while receiving the direct deposit of tax refund should be taken into account for determining the tentative date required for the refund to reach the recipient.

E-filing of taxes helps the taxpayer in saving his precious time and the tax filing process becomes easier. When direct deposits by banks are made for tax filing, it becomes extremely easy for tax refunds to get processed. Direct deposits for tax refunds take the least time to get cleared and thus are widely used in general. Tax refunds through direct deposits take approximately 5 – 10 days to get processed and cleared.

References

1. https://onlinelibrary.wiley.com/doi/abs/10.1111/joca.12194
2. https://static.newamerica.org/attachments/3814-tax-time-the-right-time/Doc_File_2124_2.31658f0b023e4dd3a8653a78948e9d62.pdf