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.
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.
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.
Here is how you can check your TDS refund status:
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.
You can claim your TDS refund online by following these steps:
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.
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.
There are several ways to save or reduce TDS on salary. Here are a few:
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.
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.