TDS stands for “Tax Deducted at Source“. It is deducted from a taxpayer’s income like salary, interest from bank accounts, rent, etc. It has to be deducted at the rates prescribed by the tax department. The person who is making the payment is responsible for deducting the tax and depositing the same with the government. This person is known as a ‘deductor’. TDS refund arises when TDS collected is more than what you owe to the government.
What is TDS Refund?
TDS refund is about getting a part of the paid TDS tax back into your account from the Government. While filing your income tax return, you should sum up all your income from various sources, find out the tax liability, and subtract the TDS applied to your income. If the tax amount deducted is higher than the actual tax liability for the financial year, it means a refund is due from the government. The sooner you file the income tax return, the earlier you can get the TDS refund.
How to claim a TDS refund
1. When excess tax is deducted by your employer:
- When the tax deducted does not match your actual tax payable, you can calculate your income and taxes, file an income tax return (ITR), and claim a refund.
- While filing the ITR online, you will need to provide the details of a bank account and its IFSC code. This makes it easier for the IT department to refund you the excess tax paid.
- In case you do not have taxable income, you can apply for a lower or NIL TDS certificate. An application for Nil/ Lower deduction of TDS is required to be filed in Form 13 to the Income Tax Officer. You can submit the Nil deduction order passed under section 197 to the TDS deductor.
2. TDS refund on Fixed Deposit:
- When your income does not fall into a taxable income bracket, you need to submit a declaration in TDS refund form – Form 15G to your bank to notify them that you don’t have a taxable income. Hence, there should be no TDS on your interest income.
- This is done to notify the bank about your non-taxable income, because of which TDS should not be deducted from the FD interest income.
- If the bank deducts tax on your interest income in spite of you submitting the Form 15G declaration, you can claim a refund by filing your ITR.
3. Senior citizens with FD accounts:
- As per Income Tax Act, Indian citizens above the age of 60 years are exempt from a tax deduction on FD interest earned up to Rs. 50,000 annually.
- In case you have no taxable income for a Financial Year (after claiming the deduction of up to Rs. 50,000 for interest income), you can submit Form 15H to your bank to notify them that you don’t have a taxable income.
- If the bank still deducts tax on your interest income from your FD, you can claim a refund by filing your ITR.
How to claim TDS Refund Online?
Follow the below mentioned steps to claim TDS refund online:
- Visit Income Tax Website
- If you are not registered, register yourself on the portal
- Log in using your login credentials
- File your income tax return by downloading the relevant ITR form
- Fill in the requisite details, upload the form and click on submit
- E-verify the submitted form using your digital signature, and your Aadhaar based OTP or net banking account.
How to Track TDS Refund Status?
Usually, it takes approximately 3 to 6 months for the refund to be credited to your bank account. The time it takes for the refund to be credited also depends on the completion of the e-verification. You can check the status of your refund by any of the following methods:
- On TIN NSDL Website using PAN.
- On the Income Tax E-filing website > My Account > Refund/Demand Status
Interest on TDS Refund
If the IT department delays in paying you the TDS refund as applicable, then you are entitled to get a simple interest of 6%. This provision comes under Section 244A of the Income Tax Act. This interest accrues from the first month of the Assessment year when an ITR is filed within the due date and from the date of filing of the returns in any other case.
Note: If the TDS refund amount is less than 10% of the income tax payable, the IT Department needn’t pay this interest. Moreover, the interest, if any, received is liable to be taxed under ‘Income from Other Sources’.
Any mistake in providing the bank account details may lead to transferring the amount to someone else or delay. To avoid any delay or non-transfer of TDS refund, you must provide the correct bank account details in the TDS certificate or ITR.
The Refund request can be cancelled only before Assessing Officer’s (AO) approval. If AO has approved the request, it cannot be cancelled.
No, the IT department will not be able to transfer funds in case he/she forgot to mention the bank details. Also, it is important to mention these details correctly so as to avoid the funds getting transferred to someone else’s account.