TDS Refund

TDS, or Tax Deducted at Source, refers to the amount of money deducted from income sources like salaries, interest payments from banks, etc. Organisations deduct this amount directly from payments to taxpayers and deposit it with the government. If, in a financial year, the TDS deducted from your income is more than your tax liability, you can claim a TDS refund when filing your income tax return (ITR). In this article, we will explain the meaning of a TDS refund, describe the TDS refund process, and discuss how to avoid common mistakes while filing your ITR.

A TDS refund claim can be made when a taxpayer’s tax liability is lower than the actual taxes paid in a given financial year. TDS refund is calculated after income from all sources is consolidated and accounted for.

Let us understand TDS refunds through an example. Imagine you open a fixed deposit with a financial institution and earn interest income on it. The institution deducts 10% as TDS on your interest earnings. If your total income throughout the financial year falls in the 5% tax slab, then for the additional amount, you may be able to claim a TDS refund.

When you file your income tax return, you must consolidate your income from all sources to determine your tax liability. From this, you can subtract the TDS that has been deducted, and if the TDS comes out to be greater than the tax liability, you can claim a TDS refund.

Now that the meaning of a TDS refund is clear, let us look at the actual process of claiming a TDS refund. When you file your ITR, you will need to input your bank details, including your IFSC code. This is so that the TDS refund can be directly transferred to your bank account. Let us take a look at a few situations when you can claim a TDS refund:

1. Salary TDS deduction higher than payable income tax

When your income is less than the baseline of the tax exemption limit, the TDS deduction can be avoided. Companies deduct advanced TDS from all salaries and report it with 24Q TDS.

However, when the TDS is higher than the actual tax liability, an ITR must be filed to claim a TDS refund. Filing the ITR would require inputting your bank details to receive a refund.

2. FD interest TDS deduction

If your income is less than the baseline exemption limit, you can submit Form 15G at your bank when a financial year starts. With this form, you declare that your taxable income is lower than the baseline so that no TDS is deducted.
However, if interest on FD is still deducted, you can claim it easily by filing the ITR.

3. FD accounts of senior citizens

Senior citizens do not have to worry about TDS deductions as they are exempt from these deductions up to Rs. 50,000 on interest income in a year. If the interest earned is over this limit but your overall income is lower than the exemption baseline, Form 15H can be submitted to the financial institution. This would contain a declaration that your income is not taxable. Again, a refund can be claimed through ITR filing if TDS is still deducted.

When the TDS return is accepted, applicants can check the status by clicking on the token number. Afterward, they can download the provisional receipt for their records.

The provisional receipt, whether accepted or rejected, is generally displayed in the following format:

Taxpayers have the option to request a reissue of their TDS refund. Before initiating this process, it's essential to verify the accuracy of ITR details and check the current TDS refund status.

To apply for a TDS refund reissue, follow these steps:

1. Visit the official Income Tax Department portal.
2. Log in to your e-filing account using your PAN and password.
3. Navigate to the 'My Account' section.
4. From the drop-down menu, select 'Service Request.'
5. Under 'Request Type,' choose 'New Request.'
6. In the 'Request Category' section, select 'Refund Reissue.'
7. Click the 'Submit' button.
8. Enter details such as account number, IFSC code, and account type.
9. Authenticate the request using Aadhaar OTP and EVC code.
10. Finally, click 'Submit' to complete the process.

Once submitted, any updates will be reflected in the centralized TIN database, and the TDS refund will be adjusted and reissued based on the revised information. It is important to check your TDS refund status before proceeding with this process.

When you file your ITR, the TDS is not instantly refunded to your bank account. The refund takes a while to be credited. Typically, it can take around 3-6 months for you to receive your TDS refund. This is assuming that you file and verify your ITR before the due date. These are the two factors based on which your TDS refund period may vary.

If you do not receive your TDS refund after this period, you must contact your employer to verify Form 26AS and Form 16 and then raise a complaint with the IT office.

If you do not receive your TDS refund within the stipulated period, you will receive an interest of 6% per year on the TDS refund’s total value. This provision is stated in Section 244A of ITA.

Let us now share an overview of the different possible statuses of your income tax refunds and what you can do in each situation:

To track your TDS refund status, follow these simple steps:

1. Visit the Income Tax Portal:
   Log in to the official e-filing portal using your credentials.
2. Navigate to the TDS Section:
   Once logged in, locate and click on the 'TDS' option, then select 'View Filed Status.'
3. Fill in the required information:
   Select the necessary details from the drop-down menus and provide essential information.
4. View refund status:
   After submitting the details, click on 'View Details' to access the TDS return status.
5. Check TDS refund status:
   • The status of your TDS return will be displayed on the screen.
   • If the file is uploaded and processed, the status will change to 'Updated.'
   • The uploaded file will be validated, and the final status will be shared.

The system typically processes and updates the status within 24 hours. The TDS refund process shown will indicate if you are eligible for a refund. To check your status, you will need to provide your PAN and the relevant Assessment Year.

Let us look at a few common mistakes that people make while filing their ITRs:

• Last-minute ITR submission
  Even though it is known to be counter-productive, many people tend to procrastinate until the last minute to submit their ITRs. It is recommended that you plan your returns well in advance and file on time.
• Paying fines for late tax
  If you fail to pay your taxes on time, you will be charged with a penalty. To avoid this, it is essential to always pay your taxes on time.
• TDS management
  You can easily manage your taxes smartly in order to avoid the hassle surrounding TDS refunds. It is important to ensure that deducted TDS equals the payable taxes.
• Knowledge regarding tax exemptions
  If you want to save the maximum amount of taxes, it is vital to know all available tax exemptions under the Income Tax Act.

If you experience delays in receiving your TDS refund, you can file a complaint to expedite the process. To ensure a smooth resolution, you will need to provide specific documents. For further assistance, you may contact the Income Tax Ombudsman, submitting the following details:

• PAN
• Form 16
• TDS certificate issued by your bank or financial institution
• Bank statement
• Documents outlining all investments and income for the relevant financial year.

Understanding TDS and claiming a TDS refund is essential for taxpayers whose TDS exceeds their tax liability. This guide outlines the steps to claim a refund, including providing bank details for direct transfer and addressing common situations like over-deduction on salary or interest income. Filing your ITR accurately and on time is crucial, as refunds typically take 3-6 months. You can also avoid common mistakes like last-minute submissions and late payments to prevent penalties. By following these procedures, taxpayers can efficiently manage their taxes and ensure a smooth TDS refund process.

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