Complete Guide on How to Claim TDS Refund

Tax Deducted at Source (TDS) helps the government collect taxes at the point of income generation. But there are times when the TDS deducted is more than the actual tax liability. In such cases, the taxpayer can get the refund for the excess amount by filing their Income Tax Return (ITR). TDS refund is not only for the taxpayer not to pay excess taxes, but also for the recovery of the excess amount deducted during the financial year. Given an overview of how to claim TDS refund online can help in timely recovery of excess tax paid.

TDS refund occurs when the tax deducted from the income exceeds the taxable income of the financial year. Income Tax Department refunds the excess tax collected in TDS when the total tax paid through TDS is more than the taxable income and applicable tax.

 For example, if you live in a rented house but do not submit your rent receipts or investment proofs to your employer on time, a higher amount of TDS may be deducted from your salary.  If you have filed an Income Tax Return with all the correct details, the tax deducted in excess of what you have claimed can be used to claim a TDS refund.

The refunds are paid straight to the bank account connected with your income tax profile as soon as the tax* return is processed.

Every assessment year, you are required to file 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 or tax claim.

Here is a complete guide on how to claim a TDS refund online.

Calculate your total taxable income

To calculate your total taxable income, add up all your income sources, such as salary, fixed deposits, rental income, etc.

Verify TDS details

Form 26AS, AIS, TIS, Form 16 and Form 16A will be checked for correct TDS deductions.

Determine actual tax liability

Calculate the total amount of tax due after applying any exemptions, deductions, and tax slab rates.

File your income tax return (ITR)

Fill out the correct ITR and enter the accurate information regarding income, deductions, and TDS details.

E-verify the return

Proceed with the e-verification process through Aadhaar OTP, net banking, or any other approved method.

Receive the refund

After successful processing of the return, the refund amount is credited to your pre-validated bank account.

Here’s how you can track the TDS refund status:

• Check the refund status portal: Use the PAN and Assessment Year to check the refund status.
• Review the status of refund processing: See if the refund is processed, credited, under review, or pending.
• Check bank account: Confirm that the bank account that is set up for refund credit is active and properly verified.
• Track Income Tax Department's email and SMS notifications: Keep an eye on any email or SMS updates from the Income Tax Department about refund processing or correction needs.
• Check out ITR status: Before waiting for the income tax return refund, check if your ITR has been processed successfully.
• Contact the refund banker: If the refund has been started but the refund banker hasn't received it yet, contact the refund banker for help.

After understanding how to track TDS refund, the article further explains when is the right time to claim the TDS refund. 

The appropriate time to claim the TDS refund are as follows:

• Excess TDS deducted by employer: If your employer deducts more tax than required and your final tax liability is lower, you can claim the excess amount through ITR filing.
• TDS deducted on interest in fixed deposit: Banks can deduct TDS on interest in fixed deposits. If the total income is less than the taxable limit, the deducted amount can be refunded.
• Senior citizens with FD income: If senior citizens' total taxable income is below the exemption limit, then they can get their refund if the TDS has been deducted on the interest earned from the FD.
• Missed tax-saving declarations: Failure to submit investment proofs or eligible deduction documents during the year may result in excess TDS deduction, which can be recovered through a refund claim.
• Multiple sources of income: If the taxes that are deducted from the different sources of income are less than the total of the tax deducted, then a refund is applicable.

The following are the documents and information required for TDS refund:

• PAN and Aadhar details
• Form 16
• Form 16A
• Form 26AS, AIS, and TIS
• Bank account details
• Investment and deduction proofs
• Capital gains information
• Income and TDS details

The following are the key things to keep in mind before TDS claim online.

• Match tax records: Cross-check Form 26AS, AIS, and TIS with your supporting documents before filing.
• Select the correct ITR form: Using the appropriate ITR form reduces the chances of processing delays.
• Claim eligible deductions only: Support every deduction claim with valid documentation and proofs.
• Verify bank account details: Incorrect bank details can result in refund failure or delays.
• Complete E-verification promptly: Your return is considered incomplete until it is successfully verified.
• Avoid reporting errors: Ensure that income details, TDS figures, and deduction claims are accurate and consistent.

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 TDS claim online. 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 the TDS refund amount.

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 how to get refund of TDS, you can easily claim your TDS refund and be a cautious taxpayer.

A TDS refund allows taxpayers to recover excess tax deducted during a financial year. By filing an accurate Income Tax Return, verifying TDS details, and providing correct bank account information, individuals can ensure smooth refund processing. Keeping documents such as Form 16, Form 26AS, AIS, and TIS readily available can help avoid errors and delays. Understanding the TDS refund process online and tracking the refund status regularly can help taxpayers receive their refund in a timely manner.