Tax Deducted at Source (TDS) refers to the amount deducted from a taxpayer’s income, such as salary, bank interest, or rent. If the TDS collected exceeds your tax liability, you are entitled to a TDS refund. This article explores the concept of TDS refunds and provides detailed guidance on how to claim them.

What is a TDS Refund?

A TDS refund occurs when the taxes paid through TDS are higher than the actual tax payable for a financial year. This is determined after consolidating income from various sources. Taxpayers fall into different tax slabs. For instance, if you earn interest from a Fixed Deposit (FD), banks typically deduct 10% TDS on the interest earned. If you fall under the 5% tax bracket, you can claim a TDS refund for the excess amount deducted.

Similarly, you can claim a TDS refund for excess TDS deducted from your salary due to non-submission of investment proofs under Section 80C or rent receipts for house rent allowance. When filing your Income Tax Return (ITR), you sum up all income sources, calculate the tax liability, and subtract the TDS deducted. If the TDS exceeds your total tax liability, you are due for a refund from the government.

How to Claim a TDS Refund

If the TDS deducted does not match your actual tax liability, you can file an ITR to claim a refund. During the ITR filing process, you will be prompted to provide your bank name and IFSC code, facilitating the refund process.

1. When Your Employer Deducts More Than the Income Tax Payable

If 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, file an ITR to claim the TDS refund.

While filing the ITR online, provide your bank account details and IFSC code to receive the refund.

2. TDS Deducted on Fixed Deposits

If your taxable income is below the basic exemption limit, submit Form 15G to your bank at the beginning of the financial year to avoid TDS on interest income.

If TDS is deducted despite submitting Form 15G, claim the refund by filing your ITR.

3. For Senior Citizens with FD Accounts

Senior citizens (age 60 or above) are exempt from TDS on interest earned up to Rs. 50,000 annually from each bank.

If the interest exceeds this limit but the total income is below the basic exemption limit, submit Form 15H to avoid TDS.

If TDS is still deducted, file an ITR to claim the refund.

How to Claim TDS Refund Online

Register on the IT department’s website: Income Tax India E-Filing

File your income tax return by downloading the relevant ITR form.

Fill in the details, upload the form, and submit.

Upon filing, an acknowledgement is generated, which you must e-verify using a digital signature, Aadhaar-based OTP, or net banking.

If e-verification is not possible, send a signed physical copy to the IT department.

TDS Refund Period

There is no fixed time for issuing the refund. Historically, if you file your ITR on time, it usually takes 1 to 6 months for the refund to be credited. The completion of the e-verification process affects the timeline. Nowadays, refunds are often issued within a month after ITR processing.

How to Verify the Status of TDS Refund

Method 1: Through the E-Filing Portal

Log in to your e-filing account.

Go to E-file > Income Tax Returns > View Filed Returns.

Under the relevant assessment year, click on ‘view details’.

If a refund is due, click on the ‘refund status’ link to view details of your ITR filing and refund status.

Method 2: Through the NSDL Website

• Visit the tin-NSDL website.

• Go to ‘Services’ tab and select ‘Status of Tax Refunds’.

• Enter your PAN, relevant assessment year, captcha, and submit to know the refund status.

• Other Methods

• Download and verify your Annual TDS summary statement.

• Contact your jurisdictional Income Tax officer.

• Reach out to the Ombudsman Income Tax Department or raise a complaint through your e-filing account.

• Check the acknowledgement and refund processing email sent to your registered email address.

• Call the CPC Bangalore toll-free number: 1800-4250-0025.

Interest on TDS Refund

If the IT department delays the TDS refund, they must pay interest at 0.5% per month or part of the month (i.e., 6% per annum) under Section 244A of the Income Tax Act. This interest accrues from the first month of the assessment year if the ITR is filed within the due date, or from the date of filing otherwise. Note that no refund is payable if it is less than 10% of the tax payable or if the amount is less than Rs. 100. Interest received on refunds is taxable under ‘income from other sources’.

Types of Income Tax Refund Status

• Refund paid: The ITR is processed, and your account is credited with the refund.

• No demand no refund: No taxes to pay or refunds to receive.

• Refund unpaid: The refund is approved but cannot be paid due to errors in bank or address details.

• Not determined: Your ITR has not yet been processed.

• Refund determined and forwarded to the refund banker: Refund request accepted, and the banker notified.

• Demand determined: Additional tax liability identified.

• Rectification processed refund determined and sent out to refund banker: Corrected return accepted and refund recalculated.

• Rectification processed and demand determined: Corrected return accepted, but additional tax demands are due.

• Rectification processed, no demand and no refund: Corrected return accepted, no refund or additional tax due.

In summary, claiming a TDS refund is a straightforward process if you follow the steps and ensure your details are accurate. It is crucial to keep track of your TDS deductions and promptly file your ITR to avoid delays in receiving your refund.