How to Claim TDS Refund on Excess Paid or Interest
TDS or Tax Deducted at Source is the amount of tax that is deducted from your salary by your employer or the deductor. Most of the time, TDS is deducted each month by employers based on tax projections declared by the employee at the beginning of each financial year.
The significance of TDS lies in the fact that it facilitates the following five things
- Regulates the collection of taxes
- Ensures a regular income to the government
- Lightens the burden of one-time tax payment and instead spreads the whole tax over several months making it easier for the tax-payer
- Provides a convenient mode of tax payment to the payer
- Spreads the reach of income tax collection without the Income Tax Department having to do it all by itself
What is TDS Refund?
Many times it is seen that investment projections declared during the start of a financial year do not match with the actual investments made at the end of that year.
If there is a mismatch between the total tax deducted at the end of a financial year and the income tax you are supposed to pay for that particular year, a TDS refund arises.
How to apply for TDS Refund or Income Tax Return (ITR)?
The process for income tax return is simple, all you need to do is, visit the website – https://incometaxindiaefiling.gov.in/, login or sign-up to download the relevant form for refund of income tax, enter all the particulars in the form, and submit it. The ITR forms are available for various categories, you would need to choose the form that is applicable for your income category.
How does ITR work?
If the scale of your income is not applicable for income tax and your employer had deducted a certain amount of money as tax, you can recover that amount by filing the ITR form. The ITR is also applicable for a situation where you have paid more than the required tax amount. Based on the details provided you, the Income Tax Department will calculate and review the taxable amount. If you are eligible for a refund, you will receive the excess amount in your bank account directly or as a cheque in your name.
You will be eligible for a 6% interest on your ITR amount if the refundable amount is more than 10% of the total taxable amount.
The procedure for raising a complaint about delay in receiving ITR
Even after applying for ITR, if you haven’t received your refund or there is a delay in receiving the refundable amount, you can get in touch with your Income Tax Officer to file a dispute. You will need to contact your Income Tax Officer in writing with all the necessary details and documents. If you do not receive a satisfactory response or any response for that matter, you can contact the Income Tax Ombudsman with the following details –
- Your PAN number
- Form 16
- Bank statement
- TDS certificate issued by your bank, and
- All the documents that show the investments and earnings
e-Filing TDS
In order to initiate the e-filing process, you would need to login or register yourself on the Income Tax Department’s website – https://incometaxindiaefiling.gov.in/. Once you have registered, you can choose to either download the relevant form and upload it back once you have completed or you can also fill the details online. The ITR-1 form is applicable for individuals earning a salary, pension, or income from property or other sources except for lottery. The ITR-2 form is applicable for individuals who are earning capital gains. The ITR-2 is applicable for a situation where there are no capital gains, however, the individual owns more than one house/property. For professionals and business owners, the ITR-3, ITR-4, and ITR-4S can be used.
When you have completed filling up the form, you will need to provide documents such as PAN, Form 16, TDS certificate, interest statements, and details of investments. Once the documents are submitted, you will receive an acknowledgment number. If you have used the digital signature, you won’t require taking any further action but if you have submitted the forms without a digital signature, you will receive an email with ITR V that is essential for completing the verification for ITR. You can either verify the document online or send a physical copy of the ITR V to Income Tax Department with your signature on it.
TDS refund status
You can check the TDS refund status by the following methods:
- An acknowledgment e-mail sent to your registered e-mail address
- By using the PAN card number on the website – https://incometaxindiaefiling.gov.in/
- By calling CPC Bangalore on 1800-4250-0025 (toll-free number) in order to check the status.
TDS refund period
The TDS refund period depends on various factors. If you have filed the ITR details on time, it can take anywhere between three to six months to receive the refund. The refund period will also depend on completing the e-verification. If you do not receive your refund on time, you may check with your employer to verify the Form 16, contact your Income Tax Office, or get in touch with Ombudsman – Income Tax Department.
Please refer to https://incometaxindiaefiling.gov.in for more information related to ITR or TDS refund.
Claiming TDS Refund:
- In case your employer deducts more tax than applicable to you as per your IT return filing. As discussed in the example above, a mismatch between tax deducted by the employer and the actual tax payable is taken care of when you file your IT return. When you file your income tax return, you are supposed to quote your bank name and IFSC code. This makes it easier for the income tax department to return the excess tax you’ve paid. Quick Tip: For any financial year, if you’re sure that the TDS deducted will surely be more than the total tax payable by you, then under section 197 you can file Form 13 in advance for lower or nil TDS deduction. The response certificate received by income tax officer can then be submitted to the authority who is supposed to deduct TDS for you.
- If your income is below the tax slab and your bank deducts tax on your fixed deposit. In case your income does not fall under the income tax bracket and your bank has deducted tax on your fixed deposit interest, you can recover the tax amount in two ways. First is to declare it in your IT return form and the income tax department will automatically compute the refund and credit it to your bank account.The second way is to fill form 15G and submit it in your bank telling them that your salary is below tax slab and hence no tax should be levied on it.
- If you are a senior citizen with fixed deposit accounts: Senior citizens are exempt from tax deduction on interest earned on fixed deposits. If you are above 60 years of age and have fixed deposit accounts, you are required to fill and submit form 15H to ensure that bank does not deduct income tax on the FD interest earned.
Alternatively, you can get the refund credited to your bank account when you file your IT return. The IT department then calculates the tax applies to you and adjusts the excess tax paid and credits it back to the bank account you’ve mentioned in your IT return form.
Quick Tip: When you declare your interest income from fixed deposits at the time of maturity, you declare it as a lump-sum amount. This can result in a hefty tax amount payable and also a higher tax slab (as your income goes up over a period of time). Hence, it is prudent to declare interest income yearly rather than at the time of deposit maturity.
