Complete Guide on How to Claim TDS Refund

9-July-2021 |

As per the Indian tax* laws, all Indian citizens earning above a specific limit should pay their taxes as per the prevailing tax slab rates. However, before the salary is credited to your account, Tax Deducted at Source (TDS) is deducted by the employer. You can claim a TDS refund at the time of filing your income tax returns (ITR) for the financial year.

The TDS refund process is easy and does not take a long time, provided you have the necessary documents. With the penetration of the internet and the improvement of digital technology, you can easily track TDS refund.

What is a TDS refund?

If you made financial declarations at the beginning of the year, which are lesser than your actual investment proofs at the end of the year, you will be eligible for a TDS refund.

For instance, if your projected investments at the start of the year were Rs 2,00,000, whereas your actual investments at the end of the financial year were Rs. 3,00,000, you may be eligible for a TDS refund. This is because you paid a higher TDS in the year, owing to the low investment declaration value. But since your actual investments are higher, you can get a TDS refund on the excess TDS sum paid.

This can happen in situations where you did not make any or all your tax-saving investments at the beginning of the year.

For instance, you invested in a long-term saving plan, such as a savings insurance plan from Tata AIA Life Insurance, towards the end of the financial year. As per the prevailing tax norms, the Tata AIA policy status is tax*-deductible. In this case, the premiums you paid for your savings policy are deductible from income under Section 80C of the Income Tax Act, 1961. This means that your taxable income should be reduced by the total premiums paid for your savings policy.

However, in reality, your TDS was deducted from the taxable income without accounting for the long-term saving plan premiums. In such a situation, you become eligible to file for a TDS refund.

 

When can you make the TDS refund claim?

Every assessment year you are required to file for your tax returns by July 31. However, the earlier you start your income tax filing process, the sooner you can get the excess Tax money reversal.

What is the TDS refund process?

Filing for a TDS refund is a simple process. If your employer has deducted more than your actual tax liability, you can follow these steps to file for your TDS refund:

 

  • Sign up or sign in to the e-filing portal of the Income Tax Department – https://www.incometax.gov.in/iec/foportal/

  • File your ITR online using the specific forms and check you TDS by clicking on ‘Taxes paid and Verification’ to verify your return.

  • After successful verification, the online system will automatically assess your information through the form submitted and calculate any income tax paid and the TDS refund, which you are entitled to receive (if any).

 

The repayment amount will show in the ‘Refund’ row in the TDS refund form online. The reflective sum is only a temporary estimation and not the final assessment amount that will be reimbursed. The actual TDS refund will be calculated once the IT Department processes your case. 

 
 
How can you track TDS refund?

You can easily track online TDS refund status on the e-filing portal. You can use these three methods to track TDS refund:

 

  • Use the reference number to track TDS refund and get relevant updates on your registered email or mobile phone number

  • Log in to the income tax e-filing portal and track online TDS refund status

 

You can use this network to track your online TDS refund status. However, to ensure your TDS refund is processed hassle-free, pre-validate the details of the bank account where you wish to receive the TDS refund. The bank account you select for tax refund should also be linked to your PAN card. 

 
 
What happens after you make the TDS refund claim?

After you file your income tax return with a TDS refund claim online, the IT Department processes your information collected through the form. When the IT Department starts assessing your income tax return, you will receive an intimation depending on the result of the processing. In such case, you will receive a communication from the IT Department under Section 143(1), which might show either of the following things:

 

  • The tax paid is correct as per the calculation of the IT Department and there is no tax payable on your behalf

  • Your tax estimation is incorrect as per the IT Department calculation, and hence, you either have to pay additional tax liability or your estimation of tax is rejected or only partially accepted, offering you a different amount than the one you specified.

  • Your income tax return matches that of the IT department. This means that you are entitled to receive the TDS refund amount (if any excess paid) that you state in full in the bank account you specified. 

As specified, you can check the online TDS refund status. Alternatively, the IT Department will also send you an intimation on your registered email and mobile number, specifying the results of your income tax return. If your income tax return is properly processed and the taxes match in full or partially, the email will also specify the refund amount and the reference number that you can use to track TDS refund. 

The IT Department will send you the TDS refund via a direct transfer to your registered bank account. In case there is a delay in your TDS refund, the IT department will also pay you interest on late payment, subject to certain conditions.

In case, you do not receive the TDS refund within three to six months from the income tax assessment order, you can follow the steps given below:

  • Download Form 26AS and verify the details with your income and TDS sum. If the information does not match, contact your TDS deductor to verify the accurateness of the TDS returns filed.

  • Contact the authorised income tax officer or the regulator. You can get their contact details from the online e-filing portal.

 

Now that you know the TDS refund process, you can easily claim your TDS refund and be a cautious taxpayer.


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