Introduction
TDS Refund sums up a method of tax collection enforced by the Income Tax Department since 1961. It has to be paid after completing a deduction of all prescribed taxes.
The Central Council of Direct Taxes manages the T.D.S. taxation system. It is a subcategory of the Indian Revenue Services. Each taxpayer must file quarterly statements to the Central Board of Direct Taxation or CBDT.
What Is a TDS Refund?
Suppose the financial statements issued at the start of the year are for some reason greater or less than the investment receipts shown at the end of the financial year. At this moment, a lump sum of taxation or TDS refund comes into force.
Suppose any discrepancy is detected between the total deducted taxes at a particular fiscal year’s end and the net tax credibility of the I.T. department for the same financial year. In that case, there arises a necessity to file a TDS refund.
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Did You Know? In the year 2023, a record number of Income Tax Returns (ITRs) were submitted by July 31, 2023. The total ITRs for Assessment Year 2023-24 surpassed 6.77 crore, marking a 16.1% increase from the previous year’s total of 5.83 crore ITRs filed by July 31, 2022 |
Concept of TDS Refund with Examples
Let us understand the concept of TDS refund with a couple of examples.
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Additional tax withdrawn = Rs. 60,000.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.
TDS Refund for Various Payments
Learn when you can claim a TDS refund. 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.
T.D.S. Refund Claim on F.D. 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.
T.D.S. Refund Claimed on Professional Fees:
- 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.
T.D.S. Refund of Past Years:
- Involves paying late filing fees when filing the Income Tax return to claim a T.D. refund.
T.D.S. Refund on Property Sales:
- 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 Can You Monitor TDS Return Status?
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
Complaint Filing Procedure for Late TDS Refund
First, you need to request the Income Tax department for a T.D.S. refund by issuing an I.T.R. if you detect that additional income tax has been deducted from your salary account. If it does not solve the issue within 3-6 months, contact the Income Tax Officer and report a discrepancy.
Address the I.T. Officer via letter putting all the relevant inputs. If there is no proper response, contact the Ombudsman and give him your P.A.N. details, bank statement, Form 16 and the T.D.S. certificate: https://incometaxindia.gov.in/Pages/Deposit_TDS_TCS.aspx
Conclusion
Any individual who is struggling to get a TDS refund can indeed receive their deserving hard-earned money by following the steps given in this blog. When taking action, one must always consider all related provisions announced by the Indian government’s I.T. Act, 1961.
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