TDS Refund - How to Claim TDS Refund?

Updated on: Aug 29th, 2025

4 min read

Tax Deducted at Source (TDS) is a form of advance tax collection where the payer deducts a specified percentage of tax before making certain payments such as salary, interest, rent, or professional fees.The TDS deducted has to be deposited with the government against the PAN/TAN of the payee within the specified TDS due dates.

Sometimes, the total TDS deducted during the financial year may exceed the taxpayer’s actual tax liability. In such cases, the excess tax paid can be claimed as a TDS refund by filing an Income Tax Return (ITR).

Key Takeaways
TDS Refund arises when total TDS deducted is more than actual tax liability.
Claim refund only by filing your ITR within the due date.
Provide correct bank details in ITR for smooth processing.
Refund status can be tracked on the Income Tax portal.

What is TDS Refund?

A TDS Refund arises when the government returns the excess tax deducted or paid during the financial year, which is higher than your actual tax liability. In simple terms, it is calculated by comparing the total TDS and advance/self-assessment tax paid with your actual tax liability on net income for the same financial year.

At the time of filing the Income Tax Return (ITR), the taxpayer needs to aggregate all income earned during the year from various sources, compute the tax liability, and adjust it against the TDS deducted during the year. If the total TDS and tax paid exceed the final tax liability, the excess amount becomes refundable by the government.

The TDS refund is issued only after the ITR is filed within the due date. Once the return is processed by the Income Tax Department, the refund amount will be directly credited to the taxpayer’s authorised bank account within the prescribed timeline.

TDS Refund Example

Mr. Raj earned income from the following sources during FY 2024-25:

Salary Income: Rs 9 Lakh (TDS deducted by employer: Rs 96,000 under old tax regime)
Bank FD Interest: Rs 50,000 (TDS deducted by bank: Rs 5,000)

Step 1: Calculate Total Income

Total Income = Rs.9 Lakh + Rs.50,000 = Rs.9,50,000

Step 2: Compute Tax Liability (as per slab for FY 2024-25 under the New regime)

Taxable Income = Rs.9.5 Lakh - Rs. 75,000 Standard deduction = Rs.8.75 Lakh
Tax on Net taxable income Rs. 8.75 Lakh is Rs. 39,000

Step 3: Adjust with TDS Already Deducted

Total TDS deducted = Rs. 96,000 (salary) + Rs.5,000 (FD interest) = Rs.1,01,000

Step 4: Find Refund

Actual Tax Liability = Rs.39,000
TDS Paid = Rs. 1,01,000
Refund = Rs1,01,000 – Rs.39,000 = Rs. 61,000

So, Mr. Raj will receive a TDS refund of Rs. 61,000 after filing and processing his ITR.

When Is the Right Time to Claim TDS Refund?

You may have experienced TDS being deducted from various sources of income and payments such as interest on Fixed Deposits, salary, dividends, PF withdrawals, etc., throughout the year. However, the refund of TDS can be claimed and received only once in a year at the time of filing your Income Tax Return (ITR).

The refund of TDS is processed only after the submission of the ITR. While filing your return, ClearTax will calculate your total tax liability based on your various sources of income. If your actual tax liability is less than the total TDS already deducted, the difference will be treated as your refund and will be credited to you after the successful filing and processing of your ITR.

How to Claim TDS Refund?

It is important to file an Income Tax Return (ITR) within the due date to claim a refund for the excess TDS deducted. If the taxpayer fails to file an ITR, then the excess TDS will not be refunded. Also, the taxpayer should make sure to provide proper bank details such as account number, bank name, and IFSC code in the ITR as the amount will be credited directly to the bank account.

The following are the cases where a TDS refund arises

1. When your employer deducts more than the income tax payable:

In case your taxable income is below the 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.

How to Verify the Status of TDS Refund

In case you haven’t received your refund, you can verify the status by logging into your e-filing account and following the below steps:-

Step 1: Log in 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 (AY) for which you want to check the IT refund status, click on ‘view details’.

Step 4: If the ITR is processed with the refund, 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.

Interest on TDS Refund

If the IT department is late in paying the TDS refund as applicable, then they must pay an 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.

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 banke	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

Frequently Asked Questions

My employer deducted TDS of Rs 50,000, but the company deposited only Rs 30,000. I filed my ITR, and the full TDS amount was refunded, but the income tax department refunded only Rs 30,000. What should I do?

You can claim income tax refund for only tax amount that is deposited to the income tax department. Unless the tax amount deducted is deposited to the government, you cannot claim the refund of the same. Unless your employer deposits the balance TDS amount, you cannot claim the refund for the same.

The status on TIN website shows that refund had been adjusted against the outstanding demand of the previous year. What does that mean?

This means the income tax refund for the current year has been adjusted against the outstanding demand of the previous Assessment year, either in part or in full. Contact the Ward Assessing Officer/CPC Bangalore for details of the outstanding demand. In e-filed returns, you can inquire by logging into the e-filing portal.

If I have paid the excessive tax, will it be refunded?

Yes, if you have paid the excessive tax, it will be refunded. To get your additional tax refund, you will have to first file ITR, following which your return will be processed. If you pay any excessive tax, the government will refund it back to your bank account via ECS. However, ensure that your bank account is prevalidated.

Do I need to submit any documents for proof while filing my income tax returns?

You shall not provide any proof or documents while filing your ITR. However, you will have to provide the details of your Aadhaar in order to file your income tax returns successfully.

How to Request for Refund Reissue (in case of refund failure)?

In case of refund failure, you can raise the service request in the e-filing portal upon receiving communication from CPC. To raise the request:

Log in to www.incometax.gov.in.
Go to ‘Services’>’Refund Reissue’.
Create a Refund reissue request, and
Select the record for which you want to raise the refund reissue request. It will display all the pre-validated bank accounts.
Select the bank account to which the income tax refund is credited and click on the ‘Continue’ button. The bank account details will be displayed for the taxpayer to cross verify.
At last, e-verify and proceed with the request submission. The Refund Reissue request will be submitted.

What are the reasons for refund payment failure?

A refund from the Income Tax Department scheduled to be paid may fail to get credited to your bank account for the following reasons:

1. In case the bank account is not pre-validated. It is now compulsory to pre-validate your bank account.

2. The name mentioned in the bank account does not match with PAN card details.

3. In case of an invalid IFSC code.

4. If the account that you have mentioned in the ITR has been closed.

About the Author

CA Mohammed S Chokhawala

Content Writer

I'm a chartered accountant, well-versed in the ins and outs of income tax, GST, and keeping the books balanced. Numbers are my thing, I can sift through financial statements and tax codes with the best of them. But there's another side to me – a side that thrives on words, not figures. Read more

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