How to Claim Your TDS Refund Efficiently in 2023?

Tax Deducted at Source (TDS) is the portion subtracted from an individual's earnings, such as salary, bank interest, or rent. If the collected TDS surpasses your tax liability, you may be eligible for a TDS refund. This guide explains the concept of TDS refunds and the process to claim them.

Understanding TDS Refunds

A TDS refund arises when the TDS paid is higher than the actual tax owed for a financial year, determined by aggregating different income sources. Taxpayers are categorized under different tax brackets; for example, a 10% TDS is usually deducted by banks on Fixed Deposit (FD) interest. If you fall into a 5% tax bracket, you are entitled to claim a refund for any extraneous TDS.

Additionally, a TDS refund can be claimed for extra deductions from salary because of missing documents for investments under Section 80C or rent receipts for house rent allowance. When filing an Income Tax Return (ITR), aggregate all income sources, determine your tax obligation, and subtract the TDS amount. If the deducted TDS is greater than the tax owed, you're eligible for a government refund.

Steps to Claim a TDS Refund

If your TDS doesn't match your actual tax liability, file an ITR to claim the refund. Provide bank details, including the bank name and IFSC code during the ITR filing process to facilitate the refund.

1. Employer Deducts More Than the Payable Tax

If your taxable income is below the exemption limit, you can avoid TDS deductions on your salary. When actual tax payable is lesser than the TDS deducted, file an ITR to obtain a refund. Make sure to provide your bank account number and IFSC code online to get the refund.

2. TDS on Fixed Deposits

If your income is below the exemption limit, submit Form 15G to your bank at the start of the financial year to prevent TDS on interest income. If TDS is deducted despite Form 15G, claim a refund via your ITR.

3. For Senior Citizens with FDs

Senior citizens (60 or older) are exempt from TDS on interest up to Rs. 50,000 annually per bank. If the interest surpasses this amount but total income is below the exemption limit, submit Form 15H to avoid withholding. If TDS is deducted, file an ITR for a refund.

Claiming TDS Refund Online

• Register on the Income Tax E-Filing website.
• Submit your income tax return using the appropriate ITR form.
• Fill in the details, upload the form, and submit it.
• An acknowledgment is generated, which you should e-verify using a digital signature, Aadhaar OTP, or net banking.
• If e-verification isn't feasible, send a signed physical copy to the IT department.

TDS Refund Timeline

There is no fixed timeline for refunds. Historically, refunds for timely filed ITRs are credited within 1 to 6 months. Timely e-verification can speed up this process, with many refunds now issued within a month after ITR processing.

Checking TDS Refund Status

Method 1: E-Filing Portal

• Log into your e-filing account.
• Navigate to E-file > Income Tax Returns > View Filed Returns.
• Under the relevant assessment year, click 'view details' to see the 'refund status' if any refund is due.

Method 2: NSDL Website

• Visit the tin-NSDL website.
• Under 'Services', select 'Status of Tax Refunds'.
• Enter PAN, assessment year, captcha, and submit to view the refund status.

Other methods include reviewing your annual TDS summary or contacting the Income Tax officer. You can also address concerns via your e-filing account or call CPC Bangalore at 1800-4250-0025. Monitor your registered email for acknowledgments and updates.

Interest on TDS Refund

If TDS refunds are delayed, the IT department pays 0.5% interest per month (6% annually) under Section 244A of the Income Tax Act. This interest applies from the first month of the assessment year if the ITR is filed on time; otherwise, it applies from the filing date. Refunds are not issued if they are under 10% of the tax or less than Rs. 100. Note that interest on refunds is taxable under 'income from other sources'.

Types of Tax Refund Status

• Refund paid: ITR processed and account credited.
• No demand no refund: No taxes or refunds required.
• Refund unpaid: Approved refund delayed due to bank/address errors.
• Not determined: Your ITR hasn't been processed.
• Refund forwarded: Refund approved, banker notified.
• Demand determined: Additional taxes owed identified.
• Rectification processed refund: Adjustments made, refund recalculated.
• Rectification and demand: Adjustments confirm more taxes due.
• Rectified with no demand/refund: No adjustments or refund.

In conclusion, claiming a TDS refund is straightforward if you follow the necessary steps and ensure your details are accurate. Monitor TDS deductions and file ITRs promptly to avoid refund delays.