Tax Deducted at Source (TDS) refers to the amount subtracted from an individual's income, such as salary, bank interest, or rent. If the TDS collected is more than your tax obligation, you're eligible for a TDS refund. This article details the concept of TDS refunds and how to claim them.

Understanding TDS Refunds

A TDS refund occurs when the TDS paid surpasses the actual tax payable for a financial year, calculated by combining income from various sources. Taxpayers fall under different tax brackets; for instance, banks typically deduct 10% TDS on Fixed Deposit (FD) interest. If you're in the 5% tax bracket, you can claim a refund for the excess TDS withheld.

You can also claim a TDS refund for extra deductions from your salary due to missing investment proof under Section 80C or rent receipts for house rent allowance. When you file your Income Tax Return (ITR), sum up all income sources, calculate your tax liability, and deduct the TDS amount. If the deducted TDS exceeds the total tax owed, you're eligible for a government refund.

Steps to Claim a TDS Refund

If the TDS doesn't align with your real tax liability, file an ITR to claim a refund. Provide bank details, such as the bank name and IFSC code, during the ITR filing process for seamless refunds.

1. Employer Deducts More Than the Payable Tax

If your taxable income is below the basic exemption limit, you can prevent TDS deduction on your salary. When the actual tax payable is less than the TDS, file an ITR to get a refund. While filing online, include your bank account number and IFSC code to receive the refund.

2. TDS on Fixed Deposits

If your income is below the exemption limit, submit Form 15G at your bank's start of the financial year to avoid TDS on interest income. If TDS deduction occurs despite Form 15G, claim a refund through your ITR.

3. For Senior Citizens with FDs

Senior citizens (60 or older) are exempt from TDS for interest up to Rs. 50,000 annually per bank. If interest exceeds this but total income is below the exemption limit, submit Form 15H to prevent 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 via the appropriate ITR form.
• Populate the form with details, upload it, and submit.
• An acknowledgement is generated, which you should e-verify via a digital signature, Aadhaar OTP, or net banking.
• If e-verification isn't possible, send a signed physical copy to the IT department.

TDS Refund Timeline

The refund issuance timeline isn't fixed. Historically, refunds for timely ITR filings are credited within 1 to 6 months. Timely e-verification accelerates this process, with many refunds now issued within a month post-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' and, if a refund is due, view the 'refund status'.

Method 2: NSDL Website

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

Other methods include checking your annual TDS summary or contacting the Income Tax officer. You could also contact the Ombudsman or submit complaints via your e-filing account. Monitor your registered email for acknowledgement and updates, or call CPC Bangalore at 1800-4250-0025.

Interest on TDS Refund

If TDS refunds are delayed, the IT department pays 0.5% per month interest (6% annually) as per Section 244A of the Income Tax Act. This interest begins from the assessment year's first month if the ITR is timely filed, otherwise from the filing date. No refund is issued if it's under 10% of the tax or less than Rs. 100. Be aware 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 what more taxes are 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 accuracy in details. Monitor TDS deductions and file ITRs promptly to avoid refund delays.