TDS Refund

What is TDS Refund?

TDS refund arises when the tax amount deducted is higher than the actual tax liability. Many times it is seen that investment projections declared during the start of a financial year do not match with the actual investments made at the end of that year.

If there is a mismatch between the total tax deducted at the end of a financial year and the income tax you are supposed to pay for that particular year, a TDS refund arises.

TDS Refund for Different Payments

  • In case your employer deducts more tax than applicable to you as per your IT return filing
  • As discussed in the example above, a mismatch between tax deducted by employer and the actual tax payable is taken care of when you file your Income Tax return. When you file your income tax return, you are supposed to quote your bank name and IFSC code. This makes it easier for the income tax department to return the excess tax you've paid.

    Quick Tip: For any financial year, if you're sure that the TDS deducted will surely be more than the total tax payable by you, then under section 197 you can file Form 13 in advance for lower or nil TDS deduction. The response certificate received by income tax officer can then be submitted to the authority who is supposed to deduct TDS for you.

  • If your income is below the tax slab and your bank deducts tax on your fixed deposit.
  • In case your income does not fall under the income tax bracket and your bank has deducted tax on your fixed deposit interest, you can recover the tax amount in two ways.

    1. First is to declare it in your IT return form and the income tax department will automatically compute the refund and credit it to your bank account.
    2. Second way is to fill form 15G and submit it in your bank telling them that your salary is below tax slab and hence no tax should be levied on it.
  • If your are a senior citizen with fixed deposit accounts:
  • Senior citizens are exempt from tax deduction on interest earned on fixed deposits. If you are above 60 years of age and have fixed deposit accounts, you are required to fill and submit form 15H to ensure that bank does not deduct income tax on the FD interest earned.

    Alternatively, you can get the refund credited to your bank account when you file your IT return. The IT department then calculates the tax applicable to you and adjusts the excess tax paid and credits it back to the bank account you've mentioned in your IT return form.

Quick Tip: When you declare your interest income from fixed deposits at the time of maturity, you declare it as a lump-sum amount. This can result in a hefty tax amount payable and also a higher tax slab (as your income goes up over a period of time). Hence, it is prudent to declare interest income yearly rather than at the time of deposit maturity.

How to Check TDS Refund Status?

The process to check the status of the TDS refund is simple and is mentioned below:

  1. Visit the e-Filing website.
  2. Login to your account by using the User ID, Password, Date of Incorporation/ Date of Birth, and Captcha.
  3. Visit the ‘My Account’ section.
  4. Select ‘Refund/Demand Status’.
  5. The assessment year, status, reason (in the case of a failure), and mode of payment will be displayed.

What are the Different TDS Refund Status?

  1. No e-Filing has been done for this assessment year
  2. Not determined
  3. Refund paid
  4. No demand no refund
  5. ITR processed
  6. refund determined and sent out to Refund Banker
  7. Refund unpaid
  8. Contact jurisdictional Assessing Officer
  9. Demand determined
  10. Rectification processed refund determined and sent out to Refund Banker
  11. Rectification processed demand determined
  12. Rectification processed no demand no refund

How to claim your TDS Refund

You can claim your TDS refund by following the steps mentioned below:

  • Step 1: File your income tax returns in the case where your employer has deducted extra amount over your actual tax liability under the head of TDS.
  • Step 2: Fill in the required fields with the name of your bank, your bank account number, and IFSC.
  • Step 3: Once the tax return is filed pointing out the TDS refund, it usually takes a few months for the income tax officer to process your returns and sanction the refund.

How to claim TDS Refund online?

You will be required to follow the steps mentioned below in order to claim your TDS refund online:

  • Step 1: Visit the official website of the Income Tax Department at incometaxindiaefiling.gov.in.
  • Step 2: If you are not already registered, register yourself on the portal.
  • Step 3: Log in to the portal using your login credentials.
  • Step 4: Find out the ITR form which is relevant to you and file the ITR.
  • Step 5: Fill in the details required on the form and submit the same.
  • Step 6: e-verify the submitted form using your digital signature, and your Aadhaar based OTP or net banking account.

What is the Time Period for TDS Refund?

The TDS refund period depends on various factors. If you have filed the ITR details on time, it can take anywhere between three to six months to receive the refund. The refund period will also depend on completing the e-verification. If you do not receive your refund on time, you may check with your employer to verify the Form 16, contact your Income Tax Office, or get in touch with Ombudsman - Income Tax Department.

Please refer to https://incometaxindiaefiling.gov.in for more information related to ITR or TDS refund.

TDS Refund Example

Sandeep works at an MNC in Bangalore. Last year he was late submitting his documents for LIC premium exemption under section 80C. As a result, his company deducted around Rs.10,000 extra as TDS.

Total tax payable by Sandeep for year 2013-2014 Rs.30,000
Tax deducted by employer from Sandeep's salary Rs.40,000
Tax refund Sandeep is eligible for Rs.40,000 - Rs.30,000 = Rs.10,000

His total income tax paid for last year turned out to be Rs.30,000 when actually it should have been just Rs.20,000. He ended up paying extra because he could not get his LIC premium receipts on time.

Similarly, Arun could not invest the Rs.40,000 within the timeline set by his employer. He just could not decide on whether to get a long-term fixed deposit or avail a life insurance policy. While he picked his brain about this decision, he missed the cut-off date for tax proof submissions as set by his employer. Eventually he ended up paying more tax even when he did invest that amount before the financial year closed.

These are typical situations that are faced by a lot of people almost every financial year. The only way to get back this extra tax is to file your income tax return. The sooner you file your income tax return, the faster the returns are processed.

Interest on TDS Refund

Under Section 200A of the Income Tax Act, if the income tax department is late in paying you the tax refund applicable to you, then you are entitled for a simple interest of 6% p.a. on your refund amount. This interest starts accruing from the first month i.e. April of any financial year. However, interest is not paid out if the tax refund is less than 10% of the total tax payable in a year.

The interest earned on tax refund is also taxable since it is considered under 'income from other sources'.

How to file complaint for a delay in Income Tax or TDS refund

Even after applying for ITR, if you haven’t received your refund or there is a delay in receiving the refundable amount, you can get in touch with your Income Tax Officer to file a dispute. You will need to contact your Income Tax Officer in writing with all the necessary details and documents. If you do not receive a satisfactory response or any response for that matter, you can contact the Income Tax Ombudsman with the following details –

  • Your PAN number
  • Form 16
  • Bank statement
  • TDS certificate issued by your bank, and
  • All the documents that show the investments and earnings

FAQ's on TDS Refund

  1. Will I get a TDS refund even if I have not provided my bank account details in the TDS Certificate or Income Tax Return?
  2. Your correct bank account details should be provided in your TDS Certificate or ITR to allow the Income Tax Department to transfer the refund amount through NEFT directly to your account. Any mistake in the bank account could lead to either transfer of the amount to someone else or delay and non-transfer. If you have not provided a bank account number, you must ensure that at least the address you have mentioned in the ITR/linked to PAN is correct, because the tax department might send you a cheque of the refund amount.

  3. How do I change my address so that I don't miss the refund cheque?
  4. You can log in to the Income Tax E-Filing portal and raise a Refund Re-issue Request. But this can be done only if you did not receive the refund cheque and it was returned to the Income Tax Department. If someone else has collected it in your name, then the taxman will no longer be responsible for the amount. The Refund Re-issue Request can be found in the 'My Account' option on the e-filing portal. You can choose your mode of refund receipt as Electronic Clearance Service (ECS) or cheque. You can change both the address and bank account number through this option. This information will be updated for all income tax-related documents.

  5. Is there an option to change contact details from what I provided in the ITR?
  6. Yes. On the Income Tax e-filing portal, on the 'Profile Settings', you will find 'Update Contact Details'. You can change your address, email id, and mobile number through this option.

  7. How many different kinds of tds refund statuses in e-filing portal?
  8. In Income Tax e-filing portal there are 11 status options for your refund amount.

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