TDS Refund - How to Claim TDS Refund

Tax Deducted at Source (TDS) is a withholding tax that requires the payer to deduct a certain amount as tax before making the payment. The TDS deducted has to be deposited with the government against the PAN/TAN of the payee within the specified TDS due dates. However, if the TDS deducted is more than the actual tax liability, the taxpayer is eligible to get the excess TDS as a refund by filing an Income Tax Return. 

In this article, we will discuss how the taxpayer can get a refund of excess TDS deducted.

What is TDS Refund?

A TDS Refund arises when the tax paid by way of TDS is greater than the actual tax payable for the Financial Year. In simple terms, if the final tax liability while filing ITR is lesser than the actual TDS deducted, then the excess TDS will be refunded to the taxpayer. 

At the time of filing ITR, the taxpayer would sum up all the income earned during the year through various sources, find out the tax liability, and subtract the TDS deducted during the FY from the final tax liability. If the TDS is higher than the total tax liability, it means a refund is due from the government.

Example 

If you have failed to disclose all the deduction details to your employer, they may end up deducting more tax from your salary as TDS. In such cases, you can claim the excess TDS deducted as a refund if your tax liability after claiming all the deductions is less than the TDS deducted.

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.

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

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