TDS Refund: Benefits,process to claim TDS refund 2024

The Indian tax system utilises a Tax Refund Deducted at Source (TDS) mechanism. This means a portion of your income tax is withheld at the source, such as by your employer or bank, before you receive your salary or interest payments. This simplifies tax collection for the government and provides a steady flow of tax revenue throughout the year.

However, there might be situations where the total TDS deducted throughout the year exceeds your tax liability. This could happen due to various reasons, such as changes in income sources, deductions, or tax slabs. By filing your Income Tax Return (ITR) and claiming the excess TDS deducted, you can receive a reimbursement for the additional tax withheld. This ensures a fair and balanced tax system where you only pay the taxes you truly owe.

TDS Refund: Benefits

Claiming your TDS refund offers a multitude of advantages. The most clear benefit is the return of your own money. If you’ve overpaid taxes through TDS, claiming a refund puts those funds back in your pocket. Also, claiming your refund can reduce your annual tax liability. This adjusted tax picture may place you in a lower tax bracket, saving you even more money. Finally, neglecting to claim a refund leaves that excess TDS with the government. If you face a tax demand later, interest charges will be calculated on the total tax liability, including the unclaimed TDS. This means you’d pay extra for not claiming your rightful refund.

TDS refund process: Eligibility

While the TDS system streamlines tax collection, it’s important to understand who qualifies for a TDS refund. The most straightforward scenario involves individuals whose total income exceeds the government’s tax exemption limit for the financial year. Since they wouldn’t owe any taxes anyway, they can claim a refund for any TDS deducted from their income.

TDS refunds also come into play when your tax-saving efforts throughout the year outweigh the TDS deducted. Think of it as recouping some of that money you put towards investments or deductions that qualify for tax benefits under sections like 80C or 80D. If the total value of these deductions and exemptions surpasses the TDS deducted from your income, you can claim a refund for the difference.

TDS Refund: Documents needed

When gearing up to claim your TDS refund, you must gather some essential documents beforehand. The cornerstone of the process is your Income Tax Return (ITR) Form. The specific ITR form you need depends on your income and tax filing status, so ensure you select the right one.

Next up is Form 16, a document provided by your employer. This form details your annual salary income and the TDS deducted from it. Having this on hand ensures your income and tax information align. If you claimed deductions for rent payments under Section 18DD, Form 18DD might also be required. This form specifically supports those deductions.

Finally, depending on your individual circumstances, you may need additional documents to substantiate your claims. This could include investment proofs if you made investments under tax-saving schemes, medical bills for eligible deductions, or bank statements for specific transactions. By collecting these documents beforehand, you can streamline the TDS refund process.

What is an Income Tax Refund?

An income tax refund is the amount of money returned to a taxpayer by the tax authorities when they have paid more taxes during the financial year than their actual tax liability. This refund is typically claimed after the taxpayer files their Income Tax Return (ITR) and the tax department processes it.

What is a TDS refund?

A TDS refund is generated when the TDS payments surpass the calculated tax liability for the specific Financial Year.

how to claim TDS refund?

If the tax deducted differs from your actual tax liability, you can compute your taxable income and taxes, submit an income tax return (ITR), and request a refund.

Case 1: When your employer deducts more than the income tax payable

If your taxable income falls below the basic exemption limit, you can prevent a TDS deduction from your salary. However, if the actual tax payable is less than the TDS deducted, you must file an Income Tax Return (ITR) to claim a TDS refund. While filing the ITR online, you are required to provide your bank account details and IFSC code. These details are necessary for the Income Tax (IT) department to process the TDS refund.

Case 2: TDS deducted on fixed deposit

If your taxable income is below the basic exemption limit, you should submit a declaration in Form 15G to your bank at the beginning of the financial year, informing them that you do not have taxable income. Consequently, no tax (TDS) will be deducted on your interest income. If the bank deducts tax (TDS) on your interest income despite submitting the Form 15G declaration, you can claim a refund by filing your ITR.

Case 3: For senior citizens with FD accounts

Senior citizens aged 60 or above are exempt from tax deductions (TDS) on interest earned from bank deposits. However, this exemption applies only if the interest on deposits from each bank does not exceed ₹50,000 annually. If your interest income exceeds this threshold but your total income is below the basic exemption limit (after section 80 deductions), you can submit Form 15H to your bank at the beginning of the financial year, indicating that you do not have taxable income. If the bank still deducts tax on your interest income from your FD, you can claim a refund by filing your ITR.

TDS Refund: Step-wise process

Claiming your rightful TDS refund involves a few key steps. Here’s a breakdown to ensure a smooth process:

1. Assemble the Essential Documents: Gather the necessary documents before embarking on your refund journey. This includes your completed Income Tax Return (ITR) form, the crucial Form 16 from your employer detailing your salary and TDS information, and any other supporting documents specific to your situation.
2. File Your ITR Electronically: Filing your ITR is mandatory to claim a TDS refund. Head to the Income Tax Department’s e-filing portal (https://www.incometax.gov.in/iec/foportal/) and submit your ITR electronically.
3. Verify Your ITR for Processing: Don’t forget the crucial step of verifying your ITR after filing. You can do this electronically using your Aadhaar-based OTP, net banking credentials, or a digital signature. This verification is essential for processing your ITR and any potential refunds.
4. Track Your Refund Status: The waiting game must not be an agonising mystery. The Income Tax Department’s e-filing portal offers a convenient feature to track your refund status. Utilise this tool to see if your ITR has been processed and gain an estimated timeframe for receiving your refund.
5. Processing Timeline: Patience is key! The processing time for TDS refunds can vary depending on the complexity of your tax situation. Typically, the refund takes 3 to 6 months to be credited directly to your bank account.

Steps for Filing the TDS Return Claim

Filing the TDS claim accurately and on time is crucial to avoid penalties and ensure compliance with tax regulations. Here are the steps to file the TDS return online.

• Provide the bank account number, name, and Indian Financial System Code (IFSC) details for successful processing.
• If you know that the TDS is payable in any financial year, you must file Form 13 under Section 197 to avail of a lower-income tax deduction benefit.
• You need to know how to get a refund of TDS deducted from the bank. For example, if the income tax is less, but the bank has deducted more tax on your fixed deposit, you can claim a refund in two ways.
• Declare the income, and the Income Tax department will refund the amount to the bank account.

How to Claim TDS Refund Online in India?

Filing income tax returns is a straightforward step in claiming a Tax Deducted at Source (TDS) refund online. It includes the following steps:

• Sign in or sign up on the online e-filing portal of the Income Tax Department, i.e., incometaxindiaefiling.gov.in
• Fill in the relevant details in the applicable Income Tax Return (ITR) form.
• On submission of the ITR, the portal generates an acknowledgment.
• E-verify the acknowledgment through the digital signature, net banking account, or an Aadhaar-based one-time password (OTP).

What is the TDS Refund Process?

Tax Deducted at Source (TDS) is a mechanism implemented by the Indian government in which tax is deducted at the point of origin of income. This means that certain payments, such as salary, interest, rent, etc., are subject to tax deduction by the payer before being transferred to the recipient.

• Register on the Income Tax Department’s website to file your TDS online.
• Next, pre-validate your bank details by entering your bank account number and IFSC code, and nominate the bank account for a refund.
• You can file your income tax return by downloading the appropriate ITR form following registration.
• Fill in the necessary details, upload the form, and click the submit button.
• Upon submission of the ITR, an acknowledgment is generated for the submitted form, which you must e-verify.
• E-verification can be done using a digital signature, an Aadhaar-based OTP, or your net banking account.
• However, if you are unable to e-verify the ITR, you can complete the verification process by sending a signed physical copy to the Income Tax Department.

How to Check TDS Refund Status?

You can verify the status of your TDS refund through the following methods:

• Review the acknowledgment and refund processing email sent by the IT Department to your registered email address to ascertain the status of your TDS refund claim.
• You can access the Income Tax website using PAN-based credentials to examine the return and track the progress of your refund.

What is the TDS Refund Period?

The Income Tax Department does not set a specific time frame for refunding. However, based on historical data, if you file your ITR on time, it typically takes 1 to 6 months for the refund to be credited to your bank account. The duration also depends on the completion of the e-verification process. Nowadays, once the ITR processing is complete, refunds are generally issued within a month.

Interest on TDS Refund

If the IT Department delays issuing your TDS refund, they must pay you the refund amount with a simple interest of 6% per annum under Section 244A of the Income Tax Act. This interest starts accruing from the first month of the assessment year if the ITR is filed by the due date and from the date of filing if the return is submitted after the due date. Note that no interest will be paid on the TDS refund if the return is filed past the due date.

Additionally, the IT Department will not pay any interest if the TDS refund amount is less than 10% of the total income tax payable. Furthermore, any interest received on the TDS refund is taxable under the head ‘Income from Other Sources.’

Types of Income Tax Refund Status

Your income tax refund status can fall into various categories, each indicating a specific stage of the refund process. Understanding these statuses can help you track your refund and take necessary actions if required. Here are the different types of income tax refund statuses:

Refund Paid

Refund Paid means that the Income Tax Department has processed your refund request and credited the refund amount to your bank account. You should check your bank statement to confirm the receipt of the refund.

No Demand No Refund

No Demand No Refund indicates that, upon processing your ITR, the Income Tax Department has determined that neither a tax demand (amount you owe) nor a refund is due to you.

Refund Unpaid

Refund Unpaid means that although the refund has been processed, it could not be credited to your bank account. This usually happens due to incorrect bank details, account closure, or issues with the bank.

Not Determined

Not Determined signifies that your ITR is still being processed, and the refund status has not yet been finalized. This is a common status soon after filing the return and before the department completes its assessment.

Refund Determined and Forwarded to the Refund Banker

Refund Determined and Forwarded to the Refund Banker means that the Income Tax Department has processed your refund and sent the details to the authorized refund banker.

Demand Determined

Demand Determined means that the Income Tax Department has found a discrepancy in your ITR, resulting in additional tax liability. Instead of a refund, you now owe money to the department.

Rectification Processed Refund Determined and Sent Out to Refund Banker

Rectification Processed Refund Determined and Sent Out to Refund Banker indicates that after you filed a rectification request to correct errors in your original ITR, the Income Tax Department has re-evaluated and determined that a refund is due.

Rectification Processed and Demand Determined

Rectification Processed and Demand Determined means that after processing your rectification request, the Income Tax Department has concluded that there is a tax demand instead of a refund.

Rectification Processed, No Demand and No Refund

Rectification Processed, No Demand, and No Refund indicates that the Income Tax Department has processed your rectification request and determined that no changes to the original assessment are required.

How to Apply for the TDS Rebate or Income Tax Return (ITR) in India?

The TDS refund process is straightforward. You just need to visit the income tax portal and log in to download the relevant form for an income tax refund. Enter all the particulars and submit the form. If the employer has deducted tax when you are not eligible, you can claim the amount by filing income tax returns (ITR). The department will review the taxable amount, and you will receive the amount directly in your bank account.

Different Types of Income Tax Refunds in India

Income tax refunds bring a sense of relief and joy to taxpayers, who often eagerly await the return of overpaid taxes. This financial reimbursement can significantly boost one’s finances, and understanding the various types of income tax refunds is essential for taxpayers. There are two types of income tax refunds:

Regular Refund

This is the most common type of refund given to taxpayers who have paid more tax than their actual liability.

Refund Under Double Taxation Avoidance Agreements (DTAA)

Non-resident taxpayers eligible for benefits under DTAA may also claim a tax refund.

Documents Required to Claim Income Tax Refund in India

To claim an income tax refund, taxpayers need to submit the following documents:

• Income Tax Return (ITR) Form
• Form 16/16A
• Proof of Investments
• Bank Details

Requirements for Claiming Income Tax Refund

While filing taxes might seem daunting, the potential refund at the end of the fiscal year can be a rewarding outcome. To claim an income tax refund successfully, taxpayers must ensure the following:

Accurate Information

All details in the income tax return should be correct and match the supporting documents.

Timely Filing

File the income tax return within the stipulated due date for the assessment year.

Valid Bank Account

Provide the correct bank account details to avoid any issues in receiving the refund.

How to Claim Income Tax Refund in India?

The process of claiming an income tax refund involves the following steps:

File an Income Tax Return

Prepare and file the income tax return using the appropriate ITR form applicable to your income sources.

Verification

Verify the ITR electronically using Aadhaar OTP or EVC (Electronic Verification Code) or by sending a signed physical ITR-V to the Centralized Processing Center (CPC).

ITR Processing

After verification, the income tax department will process the ITR and calculate the refund amount, if applicable.

Refund Disbursement

Once processed, the refund will be credited directly to the taxpayer’s bank account.

Due Date to Claim Income Tax Refund

The due date for claiming an income tax refund is the same as when filing the income tax return for the relevant assessment year. Typically, the deadline is July 31st of the assessment year.

Reasons for Delay in an Income Tax Refund

Delays in income tax refunds can occur for various reasons, and understanding these factors can help taxpayers navigate the refund process more efficiently. Several reasons may cause a delay in income tax refund processing, including:

• Incorrect Bank Account Details
• Discrepancies in ITR
• High Volume of Returns

How can You Check Your Income Tax Refund Status Through the e-filing Website?

To check the income tax refund status through the E-Filing Website, follow these steps:

• Log in to the Income Tax e-filing portal using your credentials.
• Click “View Returns/Forms” and select “Income Tax Returns” from the drop-down menu.
• Select the relevant assessment year and click on “Submit.”
• Click on the acknowledgment number of the ITR to view the refund status.

How can You Check your Income Tax Refund Status Through the TIN NSDL Website?

The Tax Information Network (TIN) maintained by the National Securities Depository Limited (NSDL) provides a user-friendly platform for taxpayers to check the status of their refunds quickly and efficiently. To check the income tax refund status through the TIN NSDL Website:

• Visit the TIN NSDL website (tin.tin.nsdl.com).
• Click “Status of Tax Refunds” under the “Services” section.
• Select the relevant assessment year and enter your PAN and captcha code.
• Click on “Submit” to view the refund status.

What Happens After You Make the TDS Refund Claim?

Upon filing your income tax return online, the IT Department assesses the information provided in the form, especially regarding any TDS refund claim. During the assessment phase, the IT Department sends you an intimation, which falls under Section 143(1), based on the outcome of the processing. This communication from the IT Department may indicate one of the following scenarios:

The tax calculation conducted by the IT Department aligns with your own calculations, resulting in no tax payable on your behalf.

The IT Department determines that your tax estimation is incorrect, leading to either additional tax liability or a rejection or partial acceptance of your tax estimation. In such cases, you may be required to pay additional tax or receive a revised refund different from the one initially specified.

Your income tax return matches the assessment conducted by the IT Department. Consequently, if applicable, you can receive any TDS refund amount in full. This refund will be credited to the bank account you specified during the filing process.

How to Claim TDS Refund? for all age groups

When the actual tax deducted does not match the actual tax payable at the end of the year, the taxpayer can file an ITR and claim a refund for the excess TDS deducted.

Also, make sure to provide the correct bank details to get a timely tax refund.

When Employer deducts more TDS than Payable

• If your salary is less than the basic exemption limit, you can avoid deducting TDS from your salary by getting a nil TDS certificate from the Income Tax officer of your jurisdiction in Form 13 as per section 197.
• You can submit this nil deduction order to the deductor to avoid a TDS deduction from your salary.
• If the tax deducted is not equal to the income tax payable, you can file an ITR and claim a refund of the excess amount deducted.

TDS Deducted on Fixed Deposit

• If your taxable income is not more than the threshold limit, then you can file Form 15G, which is a declaration, to the bank at the beginning of the year. This will help you notify them that your total income is less than the basic exemption threshold, and there should be no deduction of TDS from your interest income.
• If the bank deducts TDS even after receiving Form 15G/15H, you can claim a refund of the TDS by filing an ITR.

For Senior Citizens having FD accounts

• Senior citizens are people above the age of 60 years. Senior citizens are exempt from tax deductions on interest from bank deposits if the interest from each bank does not exceed Rs.50,000 per annum.
• If your interest income exceeds the threshold limit, but your total income is within the basic exemption limit, then you have to submit Form 15H to your bank at the beginning of the year to inform them that you don’t have a taxable income.
• If your bank still deducts TDS from your interest income, you can still claim your TDS refund by filing an ITR.

What are the Types of TDS Refund Status?

Given below are the different types of refund statuses, their meaning, and the action required –

Refund Status	Meaning	What to do?
Refund paid	The ITR is processed, and your refund is credited	Verify the refund received with the bank
No demand, no refund	No tax payable and no refund receivable	If you have requested a refund, check the comparison received from the IT Department and file a revised return if required.
Refund unpaid	Refund accepted, but not paid due to an error in bank or other details	Raise a request for refund reissue and update the information on the portal of the Income tax department.
Not Determined	Your ITR has not yet been processed	Recheck the status in a few days
Refund determined and forwarded to the refund banker	IT Department accepted the refund request and notified the refund banker	Wait for the refund credit or contact the refund banker to find the status of the refund repayment.
Demand determined	The taxpayer has to pay additional tax as the tax computation of the taxpayer differs from that of the IT department.	Check the calculation done under 143(1) to determine the mismatch/error. If an error is detected, it should be corrected by paying it to the IT department In case of no error, file a rectification including all supporting documents.
Rectification processed refund determined and sent to banker	Correction return accepted, and the refund amount recalculated and sent to the bank for further processing	Check the bank account and confirm the refund receipt.
Rectification processed and demand determined	correction return accepted, but there are unpaid tax liabilities that must be paid within a certain period of time	After cross-checking all the information, pay the outstanding tax/tax demand
Rectification processed, no demand and no refund	The IT department acknowledged a corrected return, and you don’t have any additional liability or a tax refund.	–