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TDS is the tax amount deducted from the income of a taxpayer right at its source, i.e., as and when it arises. However, there can be situations where the total TDS deducted from your income might exceed the actual tax liability. In such a case, you can claim a tax refund. Claiming a TDS refund online is a crucial step in ensuring you don't pay more taxes than you owe. This guide will walk you through the process of claiming a TDS refund and understanding different refund statuses.
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. 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.
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
TDS Deducted on Fixed Deposit
For Senior Citizens having FD accounts
You can check the TDS refund status in the following ways -
Here are the steps to check the TDS refund status using Tax2win -
To claim your TDS refund online, you need to follow the below-mentioned steps -
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 a tax refund. | - |
Understanding how to claim a TDS refund online is essential for any taxpayer as it helps them 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.
If you have filed your ITR on time, then it might take 3-6 months for your tax refund to be credited. The time taken to get the refund credit depends on when the e-verification has been completed. However, the government has made the refund process faster by implementing AI tools. Nowadays, the tax refund is credited within 20-45 days.
You can claim a TDS refund after filing your ITR. You are required to file your ITR by July 31. However, the sooner you start your ITR filing process and complete e-verification, the sooner you can get your tax refund credited.
The amount of TDS refund you receive depends on the amount of tax liability you have. For example, if your income is not taxable, still your TDS was deducted, and you might be eligible for a 100% tax refund. On the contrary, if your tax liability is less than the amount of TDS deducted, then you will get only the excess TDS deducted.
If there is a delay in refunding the excess TDS deducted, then the Central government has to pay simple interest @6% per annum on the amount to be refunded.
The minimum threshold to be eligible for TDS deduction is Rs.5,000. In other words, if your annual interest income does not exceed Rs.5,000, then TDS will not be deducted.
