TDS (Tax Deducted at Source) is deducted from a taxpayer's income, such as salary, interest from bank accounts, and rent. If the amount of TDS collected is greater than the actual tax payable for the financial year, a TDS refund can be claimed. This concept is explained in detail in this blog.

What is TDS Refund?

TDS refund occurs when taxes paid by TDS are greater than the actual tax payable for the financial year. It can be claimed for excess TDS deducted on salary or interest income.

For example, if you earn interest income from a Fixed Deposit, banks usually deduct 10% TDS on the interest accumulated. If you fall under the 5% tax bracket, you can claim a TDS refund for the additional amount deducted. Alternatively, suppose excess TDS was deducted from your salary due to non-submission of 80C investment proofs or rent receipts towards house rent allowance to your employer. In that case, you can also claim a TDS refund.

To claim a TDS refund, sum up all income, find the tax liability, and subtract the TDS. A refund is due if the TDS is more than the tax liability.

How to Claim TDS Refund on Salary / Income?

When the tax deducted doesn't match the actual tax payable, you can compute your taxable income and taxes, file an income tax return (ITR), and claim a TDS refund.

Suppose your taxable income is below the basic exemption limit. In that case, you can avoid TDS deduction from your salary by applying for a lower or nil TDS certificate from your jurisdictional Income Tax Officer in Form 13 as per Section 197.

If the actual tax payable does not equal the TDS, you need to calculate your income and taxes and file an Income Tax Return (ITR) to claim a TDS refund.

File Your TDS Online

1. To file your TDS online, register on the IT department’s website (https://incometaxindiaefiling.gov.in/).
2. After registration, download the relevant ITR form, fill in the required details, upload the form, and submit it.
3. Once submitted, an acknowledgement for the ITR is generated, which you must e-verify using a digital signature, Aadhaar-based OTP, or your net banking account.
4. If you cannot e-verify the ITR, you can send a signed physical copy to the IT department for verification.

Check your TDS Refund Status Online

Here is how you can check your TDS refund status:

1. To check the status of your TDS refund claim, you can refer to the acknowledgement and refund processing email sent by the IT Department to your registered email address.
2. Alternatively, you can use your PAN card number to check the status on the Income Tax website.
3. You can also call CPC Bangalore on their toll-free number - 1800-4250-0025- to check your TDS refund status.

TDS Refund Period

Typically, TDS refunds are credited to your bank account within 3 to 6 months if you have filed your ITR on time. The time it takes for the TDS refund to be credited depends on completing the e-verification. Nowadays, TDS refunds are issued within a month after the completion of ITR processing.

What Happens if Your TDS Refund is Delayed?

• If the IT department delays paying the applicable TDS refund, they must pay it with a simple interest of 6%, as per Section 244A of the Income Tax Act.
• This interest starts from the first month of the Assessment year when an ITR is filed on the due date and from the filing date of the returns in any other case.
• However, if the TDS refund amount is less than 10% of the income tax payable, the IT Department will not pay this interest. It is important to note that any interest received is liable to be taxed under 'income from other sources’.

Frequently Asked Questions

1. How do I get my TDS refund?

You can claim your TDS refund online by following these steps:

1. To file your TDS online, register on the IT department’s website (https://incometaxindiaefiling.gov.in/).
2. After registration, download the relevant ITR form, fill in the required details, upload the form, and submit it.
3. Once submitted, an acknowledgement for the ITR is generated, which you must e-verify using a digital signature, Aadhaar-based OTP, or your net banking account.
4. If you cannot e-verify the ITR, you can send a signed physical copy to the IT department for verification.

2. Is TDS 100% refundable?

You can claim a TDS refund if your tax liability is less than the TDS deducted. This can happen if excess TDS was deducted from your salary due to non-submission of 80C investment proofs or rent receipts towards the house rent allowance to your employer. To claim a TDS refund, calculate your total income, find your tax liability, and subtract the TDS. You are due a refund if the TDS is more than the tax liability.

3. Why is TDS deducted?

The government has established the TDS mechanism to collect taxes at the source, which helps prevent tax evasion. Deductors file all TDS deduction details in quarterly TDS returns to enable the government to know the income details of taxpayers.

4. Can I avoid TDS on salary?

There are several ways to save or reduce TDS on salary. Here are a few:

1. Invest in instruments mentioned in Section 80C, Section 80CCC, and Section 80CCD to claim deductions on salary.
2. Invest in plans that allow tax benefits include PPF Accounts, Pension Plans, Life Insurance Policy, and National Savings Certificate.
3. Additionally, those who invest in National Pension Schemes under Section 80CCD can save up to Rs. 50,000.

5. Is TDS applicable to everyone?

As per the Income Tax Act, TDS must be deducted for certain payments, regardless of whether the payer is a business, an individual, or a government agency.

6. How many days will it take to get TDS refund?

After filing the ITR, it typically takes 3-6 months for the TDS refund amount to be credited to the taxpayer's linked bank account. However, the time taken to refund the excess TDS amount depends on the speed of e-verification.