TDS Refund – How to Claim, Check Status of TDS Refund?

What is TDS?

TDS is tax deducted at the source which is a deduction made by someone while making a payment or crediting the account. As per the Income Tax Act, any company or person making a payment is responsible to deduct TDS and depositing the same to the Income Tax Department. If the payment exceeds certain threshold limits, then TDS will be deducted if it does not apply to all income groups.

The government uses TDS to collect advance tax to minimize tax evasion by deducting the TDS in advance at the time of income generated, rather than collecting it later.

TDS applies to the interest received, salaries, the commission received, etc.

What is TDS Refund?

TDS refund arises when the TDS or advance tax deducted from your income is higher than the actual tax liability.

When you file your income tax return, calculate your income from all sources after exemption and deduction, find out the tax liability, and subtract the TDS amount. If the TDS is higher than it means you will get a TDS refund.

Let’s take an example:

Atul works in MNC.

Tax deducted by employer from Atul’s salary = Rs. 40,000

Total tax payable by Atul for year 2019-2020 = Rs. 30,000

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Tax refund or TDS Refund to Atul is = Rs. 40,000 – Rs. 30,000 = Rs. 10,000

Sources from TDS Deducted

• Salaries
• Receiving accumulated taxable part of PF
• Interest received on securities
• Deemed Dividend
• Interest other than interest on securities
• Winnings from lottery, crosswords or any sort of game
• Winnings from horse race
• Insurance commission received by an individual
• Life insurance policies not exempt under section 10(10)D
• Commission or brokerage received except for insurance commission
• Payment made while purchasing land or property
• Payment of rent by individual or HUF exceeding Rs 50,000 per month
• Payment made to professional or commission or brokerage of Rs 50 lakh and above
• Cash withdrawal exceeding Rs 1 crore

How to claim a TDS refund.?

To claim TDS Refund you are required to file a tax return if you are looking forward to claiming your TDS refund.

Your employer deducts your TDS

If your TDS is more than your current financial year tax so you can claim the refund at the time of filing an Income Tax Return, during ITR filing you can provide your bank details like IFSC No, Account No and Bank Name so that the excess amount will get credited to your account.

Under section 197 you can file Form 13 in advance for lower or nil if you do not have Taxable Income.

TDS on Bank Fixed Deposit

When you earn interest on a Bank Fixed Deposit which is more than Rs. 40,000 in a given financial year, then the bank will deduct the TDS at 10% from your interest amount and in case you do not provide PAN TDS will be deducted at 20%.

If your total income is less than taxable income so you can submit Form 15G in your bank with all the important details related income and FD.

If you submit Form 15G but still TDS deducted then you can claim TDS refund by filing the income tax return.

TDS on senior citizen Bank FD

If your age is 60 or above and you have on taxable income then you can submit your Form 15H to your bank to inform them to not deduct the TDS as you do not have taxable income.

Interest on FD up to Rs. 50,000 is exempt in the case of Senior Citizens. If it is still deducted you can claim your TDS refund by filing an income tax return.

How to file ITR to claim TDS Refund?

To claim your TDS return you have to file your ITR. The process to file ITR:

Log in or register to the IT portal, select the relevant ITR form, fill the requisite details, submit the form and receive an acknowledgment number after submitting the ITR. Verify your ITR through e-verify. You can do e-verification by using a net banking account, digital signature and by Aadhaar OTP. If you cannot e-verify your ITR then you can send the physical copy of ITR to the Income Tax Department.

How to check TDS refund status?

Ways to check your TDS refund status

• IT Department will email the acknowledgment and details related to refund
• Login to IT portal and check the refund status
• Using Pan Number https://tin.tin.nsdl.com/oltas/refundstatuslogin.html
• By calling toll-free number 1800-4250-0025

When will TDS refund be credited?

TDS refund will depend on the various factors like how early you file your return, is it e-verify or send a physical copy to CPC Bangalore. Usually, it takes 3 to 6 months to receive a refund in your bank account.

If you do not receive your refund in 3 to 6 month you may ask your employer to verify your Form 16, contact the nearby income tax office, get in touch with the IT Department or download Form 26AS and verify your details.

Reasons for delay in TDS Refund

• Mismatch in data: If your submitted details do not match with the IT Department data. So always verify your TDS details before submitting the form.
• Late submission of ITR: If you did not submit your return in time you will not get a refund in time.
• Missing Bank Details: You have to provide your account details in the ITR form and if you submit the wrong account details, your refund will not get credited.
• No ITR verification: Sometimes people forget to send it to the IT department or e-verify.
• Submitted wrong ITR Form: If you have submitted the wrong ITR form then the IT department will hold your refund.

Will you get Interest on TDS?

If the income tax department delays in paying your tax refund, then you are entitled to a simple interest of at 0.5% for every month (6% per annum) on your refund amount under Section 244A of the Income Tax Act. Interest shall be calculated from April 1st of assessment year till the date refund, and interest earned on refund is also taxable as it is considered under ‘income from other sources’.

If the TDS refund amount is less than 10% of tax payable then the income department needs not pay the interest.