TDS is deducted by the employer / payer from the employee / payee’s income based on the tax deduction provided by an individual for every financial Year. It can be deducted monthly, quarterly or yearly. However, the employee / payee can claim refund if the Tax deducted is more than the liable income tax then you can claim a refund on the excess paid.
Defining TDS Refund
Tax Deducted at Source is a taxation system where the tax deduction happens at the time of earning. It is deducted by the payer from the payee’s income before paying it to him/her as per the applicable rate, and return the deducted excess amount to the individual later. It is quite usual that in a Financial year, the investment calculated, when the year begins, does not match the actual investment made at year end, such difference leads to TDS refund. For example – Miss. Lily is an employee at an MNC in Gurgaon, with an annual income of Rs.4,00,000/- per annum. The company had deducted Rs. 10,000/- extra as TDS because of her late submission of her Mutual Funds investment exemption under Section 80C.
Then, for the year 2015-16:
- Total tax deducted from Lily’s salary by her employer is Rs. 50,000/-
- Total payable tax for Lily is Rs. 40,000/-
- Then, Lily is eligible to claim a return of Rs. 10,000/-
- The means to get back this excess paid tax is by filing income tax refund (ITR).
Income Tax Refund (ITR)
At the beginning of every Financial Year, the projected investment amount is declared. But generally, due to various factors, this declared amount does not match the actual amount. If you had paid more than your liable tax you can reimburse it by applying for Income Tax Return. It is an opportunity provided by the government of India to claim the excess money paid by an individual. In short, it is a refund issued by the income tax authorities to every individual who had paid more tax than their actual tax.
Who can apply Tax Refund?
A person is eligible to apply for Income Tax Refund if he/she falls under the following situations:
- If an individual had paid more tax then the liable tax
- If the TDS deducted by the payer/employer is more than the liable tax of the individual
- If the taxpayer had paid the same tax twice, i.e. in India as well as Foreign country, where the Indian Government had agreed to no double-taxation.
- If an individual had not declared investments during TDS deduction to his/her employer which benefits him/her with tax exemptions
To elaborate, the situations in which TDS can be claimed are as follows:
Situation1: Where the employer deducts more TDS
It is quite common where the TDS deducted is more than the payable tax amount as the amount of investment is calculated at the beginning of every financial year. In such case, the tax deducted by your employer will be different from your liable tax. You can claim for return by filing ITR. It is important for a taxpayer to quote his/her bank name and IFSC code as it will make easier for the Income Tax Department to refund the excess tax paid.
Situation2: TDS on fix deposit, where your income is below the tax slab
A taxpayer can claim refund if the tax has been deducted from his/her fax deposit interest, where his/her income does not fall under the taxable bracket. No tax shall be levied if the taxpayer submits TDS refund to the bank and declaring that he/she does not fall under the tax slab. Moreover, the taxpayer can also declare the same in ITR form and the IT department will credit the excess tax paid by computing it automatically.
Situation3: TDS on Fix Deposit account, where the taxpayer is a senior citizen
If TDS has been deducted from a senior citizen (between 60 – 80 years) with FD account, he/she can claim the refund by filing ITR and submitting it to the bank.
Irrespective of these situations, a taxpayer can claim a tax refund by filing income tax return every year, where the speed of processing the excess tax return depends on how soon you file your ITR, the sooner you file your refund the faster you get your return.
An interest of 6% is liable on the ITR amount of an individual if the amount that is to be refunded is more than 10% of the taxable amount.
Process of claiming TDS refund
If Tax Deducted at Source is deducted in excess, the deductor on behalf of the deductee, can claim a refund of the excess TDS deducted. The difference in the amount of the deducted TDS and tax payable should be refunded. There is no specific form as TDS refund form to apply TDS refund. An individual only needs to file ITR where he/she should declare the computation of TDS deduction and taxable income. ITR is generally filed online, though there is a procedure to file tax returns manually.
The income tax department provides a platform where taxpayers can file their returns. It is available for both ITR Java Utility user as well as ITR Excel utility users.
To e-file income tax return follow the following steps:
Step 1: Login to Income Tax Department official website
Step 2: If you are a registered individual you can directly download relevant form or else register and follow the same
Step 3: Fill the details either online or offline, depending on your preference
After filling the form, you might need documents such as Form 16, PAN, TDS Certificate, investment details and interest statement.
Step 4: You will receive an acknowledgement number after submitting the documents
Step 5: You will receive a mail with ITR-V which you need to post it to CPC, Bangalore. If you used digital signature while filing the ITR you don’t need to do any further actions.
Types of ITR forms in India
Income tax return can be filed by any taxpayer as per the following forms:
- ITR- 1: it is applicable for salaried personals, pensions, house property income and other sources excluding lottery
- ITR-2: It is applicable for individuals with income from capital gains, or owns more than one house property
- ITR-3, ITR-4, and ITR-4S: It is applicable for professionals and business owners
Form 16 and 16A
The TDS deductor will issue a certificate to the deductee, comprising of the income earned by the deductee, the details of deducted TDS and amount sent to the government. This certificate is called Form 16. It is applicable for salaried personals and issued annually. Similarly, Form 16A is issued by TDS deductor from incomes rather than salary. It comprises the payment mode, deducted tax, and TDS submitted to the Government. Unlike Form 16, it is issued quarterly.
Procedure to raise complain on delay in receiving Income Tax Refund
After applying your ITR, if you fail to receive your return or gets delay then you should contact the Income Tax officer and file a dispute, with all the necessary tax details and documents.
Further, if the issue is not solved then contact the Income Tax Ombudsman along with the below-given details:
- Form 16
- PAN number
- TDS certificate
- Bank Statement
- Documents that prove your investment and earning.
TDS Refund duration and TDS Refund Status
The TDS refund duration/ period depends on various factors such as filing time, e-verification, the accuracy of your Form 16, etc. However, if you file your ITR timely with complete e-verification, then the refund may take three to six weeks to reach you. In case, if you fail to receive the refunded amount even if you file your ITR timely with complete e-verification then you can crosscheck your Form 16 with your employer.
Moreover, you can check your refund status by following the below-given methods:
- The acknowledgment mail mailed to your registered e-mail id
- Enquiring at IT department website using PAN number
- Calling at CPC, Bangalore at their toll-free number 1800-4250-0025
There are 11 probable refund statuses that a taxpayer may come across are given below:
|1. No efiling done for this assessment year
||It may occur if you file your ITR manually or you fail to file your ITR
|2. Not determined
||The refund amount is not ascertained as the IT department have not processed your return
|3. Refund Paid
||The refund has been made. However, if you have not received then contact the bank and post office. Or crosscheck your bank details on your e-filing profile
|4. No Demand No Refund
||If the tax deducted is accurate and the IT department owes you nothing. It implies that your calculation is different from the IT department calculation. In such case, you need to rectify or revise your ITR online.
|5. ITR Proceed and refund determined, sent out to Refund Banker
||In this case, you just need to wait for some time as your refund is processed
|6. Refund unpaid
||The department could not deliver the refund as your account number or address is wrong
|7. Contact Jurisdictional Assessing Officer
||You should contact your jurisdictional AO as the Department needs some clarification on your Tax return details.
|8. Demand Determined
||Your refund request is rejected as on calculating you owe the income tax department more money and you should pay before the deadline. In case, if you think the calculation is wrong to rectify or revise your ITR details online
|9. Rectification Proceed, refund determined, sent out to refund banker
||When your ITR rectification request is accepted and proceed
|10. Rectification proceed, demand determined
||Your ITR rectification has been accepted but you still owe the Income tax department money. You need to pay within 30 days from notice received.
|11. Rectification Proceed, No Demand No refund
||Your ITR rectification is accepted and there is no demand or refund after estimation.
Interest on TDS Refund
U/s 244A of the ITA, you are entitled to a simple interest of 6% annually if the IT Department got late to refund you your tax refund. The same is applicable from the first month of the Assessment year, i.e. April. However, the interest is not applicable if the refund amount is less than 10% of the payable tax.
To conclude, you can claim you TDS refund easily without any hassle by filing ITR.
Further to handle your tax issues you can follow the below-given precautions:
- It is always better to plan your taxes as soon as possible to avoid any rush.
- Avoid laid payment of tax. It also charges 1% of the due tax
- Avoid refund hassle by planning your tax early as TDS deduction is almost equal to your liable tax
- Update yourself with all the possible tax exemptions and claim your refund accordingly.
Frequently Asked Questions
Q. What should I do if I don’t receive my TDS refund?
Usually, TDS refund is processed and refund automatically if you file your ITR timely and completely. However, if you fail to get your refund in spite doing the same then check your Refund Status and follow the necessary. Moreover, delay refund is also possible.
Q. In India, how do I get my TDS Refund?
You can claim your TDS refund by filing your ITR.
Q. How long will the IT department take to refund my tax return?
Normally, the refund process takes 2 to 6 weeks from the date of e-filing your ITR
Q. What is the method of TDS refund payment?
The payment is made via two methods – either credited directly to your bank account or by cheque.
Q. Is it possible to claim TDS Refund for a previous Financial year?
Yes, you can claim TDS refund for the previous 2 Financial years.