Tax Deducted at Source (TDS) is the sum that is deducted from a taxpayer’s income like salary, interest from bank accounts, rent etc. If the TDS collected is more than what you owe to the government, you can get a TDS Refund. Let us explore this concept in detail.
What is TDS Refund?
A TDS Refund arises when the taxes paid by way of TDS are greater than the actual tax payable calculated for the Financial Year. It is calculated after consolidating income earned from various sources.
We all, as taxpayers, are categorized under various tax slabs. Say, you have an FD and earn an interest income out of it. Banks levy a basic 10% TDS on the interest accumulated. Now, if you belong to the 5% tax bracket, you can claim a TDS refund for the additional amount deducted.
Similarly, you can also claim a TDS refund of excess TDS deducted on salary due to non-submission of 80C investment proofs or rent receipts towards house rent allowance to the employer.
At the time of filing ITR, you would sum up all your income from various sources, find out the tax liability, and subtract the TDS deducted during the FY. If the TDS is higher than your total tax liability for the financial year, it means a refund is due from the government.
How to Claim TDS refund
When the tax deducted does not match your actual tax payable, you can calculate your taxable income and taxes, file an income tax return (ITR) and claim a refund.
During the ITR filing process, you will be prompted to provide your bank name and IFSC code. This makes it easier for the IT department to refund you the excess tax paid.
1. When your employer deducts more than the income tax payable:
- In case your taxable income is below basic exemption limit, you can avoid TDS deduction from your salary.
- If the actual tax payable is less than the TDS, you must file Income Tax Return (ITR) to claim TDS refund.
- While filing the ITR online, you need to provide the details of a bank account and IFSC code. The Income Tax (IT) department requires these details to give a TDS refund.
2. TDS deducted on fixed deposit:
- When your taxable income is less than basic exemption limit, submit a declaration in Form 15G at the beginning of the FY to your bank to notify them that you don’t have a taxable income. Hence, no tax (TDS) would be deducted on your interest income.
- If the bank deducts tax (TDS) on your interest income in spite of you submitting the Form 15G declaration, you can claim the refund by filing your ITR.
3. For senior citizens with FD accounts:
- Senior citizens of age 60 or above are exempt from tax deductions (TDS) on interest earned from deposits with banks. However, the exemption is applicable if interest on deposits from each bank is up to Rs.50,000 annually.
- In case your interest income is more than the threshold limit stated above, but your total income is below the basic exemption limit (after section 80 deductions), you can submit Form 15H to your bank at the beginning of the financial year to notify them that you don’t have a taxable income.
- If the bank still deducts tax on your interest income from your FD, you can claim a refund by filing your ITR.
How to Claim TDS Refund Online
- To claim your TDS online, you have to first register yourself on the IT department’s website: https://incometaxindiaefiling.gov.in/.
- After registration, you can file your income tax return by downloading the relevant ITR form.
- Fill in the requisite details, upload the Form and click on submit.
- Upon filing the ITR, an acknowledgement is generated for the ITR submitted, which you must e-verify. You can do e-verification by using a digital signature, an Aadhaar-based OTP or your net banking account.
- However, if you haven’t been able to e-verify the ITR, then you can complete the verification by sending a signed physical copy of the same to the IT department.
What is the TDS Refund period?
There is no time limit fixed by the department to issue the refund. Based on historical data, if you have filed your ITR on time, it usually takes approximately 1 to 6 months for the refund to be credited to your bank account. The time it takes for the refund to be credited also depends on the completion of the e-verification. Nowadays, after the completion of ITR processing, a refund is issued within a month.
How to Verify the Status of TDS Refund
I. In case you haven’t received your refund, you can verify the status by log in to your e-filing account and follow the below steps:-
Step 1: Login to your e-filing account
Step 2: Go to E-file> Income Tax Returns > View Filed Returns.
Step 3: Now under the relevant assessment year for which you want to check the IT refund status, click on ‘view details’.
Step 4: If the ITR is processed with refund due, click on the ‘refund status’ link. The screen will show complete details of your ITR filing, i.e. from the date of ITR filed, ITR e-verification, ITR processed to the date of issuing a refund.
II. You can also verify the income tax refund status through NSDL website.
Step 1: Got to tin-NSDL website and go to ‘Services’ tab and select option ‘Status of Tax Refunds’.
Step 2: Enter PAN, relevant assessment year, captcha and submit to know the refund status.
III. Other ways to verify your TDS refund status are:-
- Download and verify your Annual TDS summary statement consisting details of Demand and Refund.
- Get in touch with your jurisdictional Income Tax officer.
- Contact Ombudsman Income Tax Department or raise a complaint through your e-filing account.
- Check the acknowledgement and refund processing email sent by the IT Department to your registered email address to check the claim status of TDS refund
- Call the CPC Bangalore on their toll-free number - 1800-4250-0025..
Interest on TDS Refund
If the IT department is late in paying you the TDS refund as applicable, then they must pay you the amount with a interest of 0.5% for every month or part of the month (i.e.6% per annum). This provision comes under Section 244A of the Income Tax Act. This interest accrues from the first month of the Assessment year when an ITR is filed within the due date and from the date of filing of the returns in any other case.
Do note that no refund is payable if the refund is less than 10% of the tax payable; similarly, if the refund amount is less than Rs.100, there will be no refund. Moreover, the interest, if any, received is liable to be taxed under ‘income from other sources’.
Types of Income Tax Refund Status
Refund Status | Meaning | Action to be Taken |
Refund paid | The ITR filing is processed, and your account is credited with the refund | Verify the refund received with the bank |
No demand no refund | Not required to pay taxes or eligible for any refunds | When you have requested a refund, review the comparison you received from the IT Department and file a corrected return if necessary |
Refund unpaid | The IT department has accepted a refund, but it cannot be paid due to a bank or address details error | Raise a refund reissue request and update the appropriate information on the income tax portal |
Not Determined | Your ITR has not yet been processed | Recheck the status in a few days |
Refund determined and forwarded to the refund banker | IT Department accepted the refund request, and the refund banker has been notified | Wait for the refund to be credited to your account or contact the refund banker to find out the status of the refund payment |
Demand determined | There is an additional tax obligation that needs to be paid because the tax calculation differs from that of the IT department | Verify the calculation done under 143(1) to determine the mismatch/error. If an error is determined, it should be corrected by paying it to the IT department within the specified timespan. If there is no error, file a rectification and include all supporting information and documents to support the refund claim |
Rectification processed refund determined and sent out to refund banker | Correction return has been accepted, and in addition, the refund amount has been recalculated and sent to the bank for processing | Confirm refund receipt by checking your bank account |
Rectification processed and demand determined | The correction return has been accepted, but there are unpaid tax obligations (tax demands) that must be paid within a certain period of time | After cross-checking all the information within the designated time frame, pay the outstanding tax/tax demand |
Rectification processed, no demand and no refund | The IT department has acknowledged a corrected return and you are not liable for a tax refund or required to pay any additional tax | - |
Other TDS Articles:
1. What is Tax Deducted at Source
2. TDS Rate Chart
3. How to Make TDS Payment Online
4. TDS Calculator
