A TDS refund occurs when excess Tax Deducted at Source (TDS) has been deducted from an individual's income, and they are eligible for a refund from the Income Tax Department. This article provides a detailed guide on the TDS refund process, the expected timeframe, and step-by-step instructions on how to claim it efficiently.
What is TDS Refund?
When the tax deducted at source (TDS) exceeds the actual tax liability, the excess amount is reimbursed by the Income Tax Department. The Central Board of Direct Taxes (CBDT) oversees this system under the Income Tax Act, 1961, ensuring proper tax collection.
If the total amount deducted during a financial year is more than what is owed, the taxpayer can request a reimbursement by filing an Income Tax Return (ITR). This situation often arises in cases involving salary income, fixed deposits (FDs), professional fees, or property transactions.
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Did You Know? In 2024, a record 7.28 crore Income Tax Returns (ITRs) were filed by July 31, marking a 7.5% increase from the 6.77 crore filed by the same date in 2023. Timely filing and e-verification have expedited the TDS refund process, with many refunds now processed within 15 to 45 days |
Understanding TDS Refund with Examples
Learn when you can claim a refund TDS. If too much tax is deducted from your wages, follow these steps for a refund.
Example 1: Rahul is employed currently in an I.T. firm in Bangalore. For some reason, Rahul was late presenting the legal papers for a premium that must be discharged under Section 80C. As a result, Rs. 10,000 additional TDS was levied.
Net TDS amount paid by Rahul = Rs. 50,000 (calculated for one fiscal year)
Additional tax withdrawn = Rs. 60,000.
Therefore, Rahul’s tax refund becomes Rs. 10,000.
Example 2: Saroj could not invest Rs.20,000 as specified by his employer. Saroj got confused about whether he should put the money in a Life Insurance scheme or long-term fixed deposit savings. As he crossed the deadline, the manager asked for his Income-tax proof. This ultimately resulted in Saroj furnishing more TDS amounts even though he had already completed his investments for that particular year.
It is a typical scenario encountered by all salaried professionals each year, therefore inviting the T.D.S. refund process into force. The sooner someone files their I.T. return, the quicker they get their T.D.S. refunded.
Find out how to calculate TDS on salary with our user-friendly online TDS interest calculator for precise results.
How to Claim a TDS Refund?
Learn when you can claim a refund TDS. If too much tax is deducted from your wages, follow these steps for a refund.
File an I.T.R., ensuring you’re eligible for a refund. Provide your bank details during filing, enabling the Income-tax Division to credit the excess amount to your account. If your income is low, you can request a NIL TDS certificate using Form 13 from the I.T. Officer. Section 197 outlines this option. Once you get the nil deduction order, show it to the T.D.S. deductor as proof.
TDS Refund claim on Fixed Deposit Interest
- Different methods exist for claiming a T.D.S. refund on fixed deposit interest, depending on your situation.
- If TDS is applied by the bank on your F.D. interest, file an I.T. Return based on your tax bracket.
- Use Form 26S, available on the Income-tax Department’s website, to assess interest rate and TDS amount.
- The I.T. department calculates and credits the refund to your registered account.
- Senior citizens are exempt from TDS on F.D. interest; submit Form 15h to the bank for this exemption.
- If your salary doesn’t fall into any tax bracket, submit Form 15G to the bank before the financial year ends.
TDS Refund on Professional Fees (Section 194J)
- Applicable when excess TDS is deducted under Section 194J for technical and professional duties.
- File an I.T. return if the net tax amount is less than the deducted T.D.S.
- Use Form I.T.R. 3 with preserved book of accounts or I.T.R. 4 without book of accounts for filing.
why my tds refund is late?
- Involves paying late filing fees when filing the Income Tax return to claim a T.D. refund.
TDS Refund on Property Sale & Processing Time
- Buyers should request 0.75% to 1% of T.D.S. from the seller’s current financial year during property acquisition.
- Seller can claim credit for the T.D.S. amount in their tax statement.
- Process for claiming T.D.S. refund is similar, requiring I.T.R. filing through the relevant bank branch.
The Time for a Refund of the TDS Amount
The time taken for a T.D.S. refund relies on several events. If an individual has filed the I.T.R. on time, it usually takes 3-6 months to receive the refund amount. The time also gets delayed if the e-verification is not done on time. After waiting for a considerable period, if you do not get the refund money, contact your employer to get hold of Form 16. Thereby contact the nearest branch of the Income Tax Office.
How to Check TDS Refund Status Online?
You have to visit the e-portal of the Income Tax department and log in to the site with a valid username, password, D.O.B. and captcha. Then you need to navigate to the My Account page and select the option “Refund/Demand Status”. The screen will present the following details:
- Assessment year
- Refund status
- The reason stated behind refund failure (if applicable)
- M.O.P. or mode of payment
What to Do If Your TDS Refund Is Delayed?
First, you need to request the Income Tax Department to refund TDS by filing an ITR if you detect that excess tax has been deducted from your salary account. If the issue is not resolved within 3-6 months, contact the Income Tax Officer and report the discrepancy.
Address the Income Tax Officer via a formal letter, including all relevant details. If there is no proper response, escalate the issue to the Ombudsman and provide your PAN, bank statement, Form 16, and TDS certificate. For more details, visit the Income Tax Department’s Official Website.
Conclusion
Anyone facing difficulties in receiving a TDS refund can successfully claim their rightful amount by following the steps outlined in this blog. It is essential to adhere to all relevant provisions under the Income Tax Act, 1961, to ensure a smooth refund process.
