TDS Refund: How to Claim TDS Refund?

A TDS refund happens when the total tax deducted from your income (called TDS or Tax Deducted at Source) is more than the actual tax you were supposed to pay for the year.

Let us understand it better with a simple example. Suppose you have a fixed deposit (FD) with a bank. The bank automatically deducts 10% TDS on the interest you earn. But what if your total annual income is low and you fall under the 5% tax bracket or even the no-tax slab? That means more tax was deducted than required. In such a case, you can file for a TDS refund to get that extra amount back.

Also, it is not just for FDs. Many people also face extra TDS deductions from their salary. This can happen if you did not submit investment proofs (like under Section 80C) or rent receipts for claiming House Rent Allowance (HRA). Your employer, unaware of these deductions, might deduct more tax than needed. But do not worry, you can easily get a TDS amount refund!

When you file your Income Tax Return (ITR), you add up all your income from different sources, including salary, FD interest, house rent, etc. Then calculate the tax you owe, and compare it with the total TDS deducted throughout the year. If there is more TDS, you can claim the extra as a refund.

Example:

Let us say you had a home loan and paid interest, which qualifies for tax deductions. But if you forgot to inform your employer, they may have deducted more tax from your salary. When you include the home loan interest while filing your ITR, your total tax liability reduces, and you can TDS refund claim for the extra tax paid.

In short, if you have paid more tax than necessary, you have every right to get that money back from the government through a TDS refund.

When Can You Claim a TDS Refund?

If the tax deducted differs from your actual tax liability, you can compute your taxable income and taxes, submit an income tax return (ITR), and request a refund. Let us look at a few common cases:

Case 1: When Your Employer Deducts More Than the Income Tax Payable

If your taxable income falls below the basic exemption limit, you can prevent a TDS deduction from your salary. However, if the actual tax payable is less than the TDS deducted, you must file an Income Tax Return (ITR) to claim a TDS refund. While filing the ITR online, you are required to provide your bank account details and IFSC code. These details are necessary for the Income Tax (IT) department to process the TDS recovery.

Case 2: TDS Deducted on Fixed Deposit

If your taxable income is below the basic exemption limit, you should submit a declaration in Form 15G to your bank at the beginning of the financial year, informing them that you do not have taxable income. Consequently, no tax (TDS) will be deducted on your interest income. If the bank deducts tax (TDS) on your interest income despite submitting the Form 15G declaration, you can claim a refund by filing your ITR. 

Case 3: For Senior Citizens with FD Accounts

Senior citizens aged 60 or above are exempt from tax deductions (TDS) on interest earned from bank deposits. However, this exemption applies only if the interest on deposits from each bank does not exceed ₹50,000 annually. If your interest income exceeds this threshold 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, indicating that you do not have 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 in India?

Now, let us come to the main question: How to claim TSD? Filing income tax returns is a straightforward step in claiming a TDS refund online. It includes the following steps:

• Sign in or sign up on the online Income Tax e-filing portal, e., incometaxindiaefiling.gov.in
• Fill in the relevant details in the applicable Income Tax Return (ITR) form.
• On submission of the ITR, the portal generates an acknowledgment.
• E-verify the acknowledgement through the digital signature, net banking account, or an Aadhaar-based one-time password (OTP).

How to Check TDS Refund Status?

After learning about how to claim TDS, you can verify the status of your TDS refund through the following methods:

• Review the acknowledgment and refund processing email sent by the IT Department to your registered email address to ascertain the status of your TDS refund claim.
• You can access the Income Tax website using PAN-based credentials to examine the return and track the progress of your refund.

What is the TDS Refund Period?

The Income Tax Department does not set a specific time frame for refunds. However, based on historical data, if you file your ITR on time, it typically takes 1 to 6 months for the refund to be credited to your bank account. The duration also depends on the completion of the e-verification process. Nowadays, once the ITR processing is complete, refunds are generally issued within a month.

Interest on TDS Refund

If the IT Department delays issuing your TDS claim, they must pay you the refund amount with a simple interest of 6% per annum under Section 244A of the Income Tax Act. This interest starts accruing from the first month of the assessment year if the ITR is filed by the due date and from the date of filing if the return is submitted after the due date. Note that no interest will be paid on the TDS refund if the return is filed past the due date.

Additionally, the IT Department will not pay any interest if the refund amount is less than 10% of the total income tax payable. Furthermore, any interest received on the TDS refund is taxable under the head ‘Income from Other Sources.’

Types of Income Tax Refund Status

Want to understand what the refund status means? Here is a quick and simple table for you showcasing the types of income tax refund status:

What Happens After You Make the TDS Refund Claim?

Upon filing your income tax return online, the IT department assesses the information provided in the form, especially regarding any TDS refund claim. During the assessment phase, the IT department sends you an intimation, which falls under Section 143(1), based on the outcome of the processing. This communication from the IT Department may indicate one of the following scenarios:

The tax calculation conducted by the IT department aligns with your own calculations, resulting in no tax payable on your behalf.

The IT department determines that your tax estimation is incorrect, leading to either additional tax liability or a rejection or partial acceptance of your tax estimation. In such cases, you may be required to pay additional tax or receive a revised refund different from the one initially specified.

Your income tax return matches the assessment conducted by the IT Department. Consequently, if applicable, you can receive any TDS refund amount in full. This refund will be credited to the bank account you specified during the filing process.

Final Thoughts

Claiming a tax refund is a process that can be accomplished in a few easy steps, especially now that you know exactly how to claim TDS and get your refund. It may sound technical at first, but once you follow the steps, it is quite easy.

Whether you are a salaried employee, a senior citizen with FDs, or just someone who overpaid tax, you deserve that refund. Just make sure to keep your Form 26AS updated, file your ITR correctly and on time, verify your return, and track your refund status regularly. That is it, you are all set to master the TDS refund process like a pro!

FAQs on How to Get TDS Refund