Budget 2025 Update
The Union Budget 2025 has proposed significant rationalization of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) to alleviate compliance challenges for taxpayers, particularly middle-income earners. The government has raised the threshold limits across various TDS sections to simplify the tax process. Below is a summary of the proposed changes:
| Section |
Present Threshold |
Proposed Threshold |
| 193 - Interest on securities |
NIL |
₹10,000 |
| 194 - Dividend for an individual shareholder |
₹5,000 |
₹10,000 |
| 194A - Interest other than Interest on securities |
(i) ₹50,000/- for senior citizens;
(ii) ₹40,000/- for banks, cooperative societies, and post offices;
(iii) ₹5,000/- in other cases
|
(i) ₹1,00,000/- for senior citizens;
(ii) ₹50,000/- for banks, cooperative societies, and post offices;
(iii) ₹10,000/- in other cases
|
194B - Winnings from lottery, crossword puzzle, etc. &
194BB - Winnings from horse race |
Aggregate of amounts exceeding ₹10,000/- during the financial year |
₹10,000/- in respect of a single transaction |
| 194K - Income in respect of units of a mutual fund |
₹5,000 |
₹10,000 |
| 194G - Income by way of commission, prize, etc. on lottery tickets |
₹15,000 |
₹20,000 |
| 194D - Insurance commission |
₹15,000 |
₹20,000 |
| 194-I - Rent |
₹2,40,000 (in a financial year) |
₹6,00,000 (in a financial year) |
| 194H - Commission or brokerage |
₹15,000 |
₹20,000 |
| 194LA - Income by way of enhanced compensation |
₹2,50,000 |
₹5,00,000 |
| 194J - Fee for professional or technical services |
₹30,000 |
₹50,000 |
| 206C(1G) – Remittance under LRS and overseas tour program package |
₹7,00,000 |
₹10,00,000 |
Notes:
- TCS on remittances for educational purposes will be removed if financed through loans from specified financial institutions (Section 80E).
- TCS on the purchase of goods will be removed, effective from April 1, 2025.
- The higher TDS rate will apply only in cases where taxpayers fail to provide their PAN.
What is a TDS refund?
TDS refund takes place only when the taxes paid by way of TDS or Tax Deducted at Source is more than the actual tax that has to be paid by the taxpayer at the end of the year. A TDS refund can also be granted if the expected investments declared at the beginning of the year by the taxpayer are less than the actual investments made at the end of the year.
For example, if you earn interest on FDs, the banks deduct TDS @ @10%. Now, if you fall under the 5% tax bracket, you can claim a refund of the excess TDS deducted.
How to Claim TDS Refund?
When the actual tax deducted does not match the actual tax payable at the end of the year, the taxpayer can file an ITR and claim a refund for the excess TDS deducted.
Also, make sure to provide the correct bank details to get a timely tax refund.
When Employer deducts more TDS than Payable
- If your salary is less than the basic exemption limit, you can avoid deducting TDS from your salary by getting a nil TDS certificate from the Income Tax officer of your jurisdiction in Form 13 as per section 197.
- You can submit this nil deduction order to the deductor to avoid a TDS deduction from your salary.
- If the tax deducted is not equal to the income tax payable, you can file an ITR and claim a refund of the excess amount deducted.
TDS Deducted on Fixed Deposit
- If your taxable income is not more than the threshold limit, then you can file Form 15G, which is a declaration, to the bank at the beginning of the year. This will help you notify them that your total income is less than the basic exemption threshold, and there should be no deduction of TDS from your interest income.
- If the bank deducts TDS even after receiving Form 15G/15H, you can claim a refund of the TDS by filing an ITR.
For Senior Citizens having FD accounts
- Senior citizens are people above the age of 60 years. Senior citizens are exempt from tax deductions on interest from bank deposits if the interest from each bank does not exceed Rs.50,000 per annum.
- If your interest income exceeds the threshold limit, but your total income is within the basic exemption limit, then you have to submit Form 15H to your bank at the beginning of the year to inform them that you don’t have a taxable income.
- If your bank still deducts TDS from your interest income, you can still claim your TDS refund by filing an ITR.
How to Check TDS Refund Status
You can check the TDS refund status in the following ways -
- Check the email received from the Income Tax Department to check the status of your tax refund application.
- You can also check the TDS refund status on the income tax website using your PAN number.
How to Check TDS Refund Status on Tax2win
Here are the steps to check the TDS refund status using Tax2win -
- Visit Tax2win’s website.
- Enter your PAN number.
- Select the Assessment year for which you want to check your refund status.
- Enter your email address, ITR Acknowledgment number, and mobile number.
- Click Submit.
What to do if you have received less refund than what you claimed?
An Income Tax Refund is one of the most anticipated outcomes after filing your ITR. While many have already received their refunds, others are still waiting. If the refund you received doesn’t match your expectations, let us explain why this might have happened and what steps you can take:
The first action you can take is to file a rectification request under Section 154 of the Income Tax Act, 1961.
How to file a rectification request
- Log in to the Income Tax e-filing portal using your valid user ID and password to access your account.
- Navigate to the 'Services' section and click on 'Rectification' from the dropdown menu.
- Click on the 'New Request' button.
- Choose the correct assessment year and ‘Income Tax’ from the drop-down menu and click ‘Continue.’
- Choose the ‘Request Type’ from the ‘Request Type’ drop-down menu.
- Fill in the required details about the error, such as the nature of the mistake and supporting documents.
- Once you've completed the form, submit the request.
- You will need to e-verify the request on the verification page to complete the process.
Types of errors you can rectify
As per Section 154(1) of the Income Tax Act, you can file a rectification request. Here is the list of errors you can correct under this:
- Arithmetic mistakes
- Clerical errors (incorrect names, PAN numbers, or amounts)
- Factual errors ( Incorrect income figures or deductions)
- Errors due to overlooking compulsory provisions of the law
How to Claim TDS Refund Online
To claim TDS online, you need to follow the below-mentioned steps -
- First, create an account on the IT department’s website.
- Next, download the applicable ITR Form after registering on the Income Tax website to file your income tax return.
- Fill in the required details in the Form and submit it.
- E-verify the ITR acknowledgment generated after filing the ITR. Aadhaar-based OTPs, net banking accounts, and digital signatures can be used to complete e-verification.
- You can also complete the e-verification of the ITR by sending a signed physical copy to the IT department.
What are the Types of TDS Refund Status?
Given below are the different types of refund statuses, their meaning, and the action required -
| Refund Status |
Meaning |
What to do? |
| Refund paid |
The ITR is processed, and your refund is credited |
Verify the refund received with the bank |
| No demand, no refund |
No tax payable and no refund receivable |
If you have requested a refund, check the comparison received from the IT Department and file a revised return if required. |
| Refund unpaid |
Refund accepted but not paid due to an error in bank or other details |
Raise a request for refund reissue and update the information on the portal of the Income tax department. |
| Not Determined |
Your ITR has not yet been processed |
Recheck the status in a few days |
| Refund determined and forwarded to the refund banker |
IT Department accepted the refund request and notified the refund banker |
Wait for the refund credit or contact the refund banker to find the status of the refund repayment. |
| Demand determined |
The taxpayer has to pay additional tax as the tax computation of the taxpayer differs from that of the IT department. |
Check the calculation done under 143(1) to determine the mismatch/error. If an error is detected, it should be corrected by paying it to the IT department In case of no error, file a rectification including all supporting documents. |
| Rectification processed refund determined and sent to banker |
Correction return accepted, and the refund amount recalculated and sent to the bank for further processing |
Check the bank account and confirm the refund receipt. |
| Rectification processed and demand determined |
correction return accepted, but there are unpaid tax liabilities that must be paid within a certain period of time |
After cross-checking all the information, pay the outstanding tax/tax demand |
| Rectification processed, no demand and no refund |
The IT department acknowledged a corrected return, and you don’t have any additional liability or tax refund. |
- |
Understanding how to claim a TDS refund online is essential for any taxpayer as it helps them TDS claim the refund of any excess tax paid. Whether it's rectifying errors in TDS deductions or ensuring that you receive the right refunds, staying informed about the process is key. By following the steps outlined here and monitoring your refund status. If you have not received your TDS refund yet, make sure you check your TDS refund status and take the necessary action. Check TDS Refund! If you need more help related to TDS calculation, TDS filing, or Income Tax Return, tax experts at Tax2win can help you understand taxes and filing your ITR with maximum refund. Book online consultation with CA now!
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