TDS Refund – How to claim TDS Refund

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 applied to your income. 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 by applying for a lower or Nil TDS certificate from your jurisdictional Income Tax Officer in Form 13 as per Section 197.
• You can submit the Nil deduction order passed under section 197 to the TDS deductor. To know more about how to file Form 13 and apply for lower tax deduction under Section 197, click here- Form 13 as per Section 197.

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 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 file 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 aAadhaar-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 check TDS refund status

You can check the status of your TDS refund:

• Acknowledgement and refund processing email from the IT Department
• Using the PAN card number to check on https://incometaxindiaefiling.gov.in/
• By calling CPC Bangalore

What is the TDS Refund period?

Usually, if you have filed your ITR on time, it takes approximately 3 to 6 months for the refund to be credited in your bank account. The time it takes for the refund to be credited also depends on the completion of the e-verification. Now a days, after completion of ITR processing, refund is issued within a months time.

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 is:-

• Download and verify your Form 26AS (Annual TDS summary statement) with your TDS and income details.
• Get in touch with your jurisdictional Income Tax officer.
• Contact Ombudsman Income Tax Department or raise a complaint through your e-filing account.

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 simple interest of 6%. 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 with the due date and from the date of filing of the returns in any other case.

Do note that if the TDS refund amount is less than 10% of the income tax payable, the IT Department will not pay this interest. Moreover, the interest, if any, received is liable to be taxed under ‘income from other sources’. 

Frequently Asked Questions

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

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?

It means income tax refund for the current year had been adjusted against outstanding demand of the previous Assessment year either in part or in full. Contact 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:

1. Log in to www.incometax.gov.in.
2. Go to ‘Services’>’Refund Reissue’.
3. Create a Refund reissue request, and 
4. Select the record for which you want to raise the refund reissue request. It will display all the prevalidated bank accounts. 
5. 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. 
6. At last, e-verify and proceed with the request submission. The Refund Reissue request will be submitted.

For better understanding, Read more related articles:

• Income tax refund claiming process and check refund status
• Check Income tax refund status online

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