Wanted to know how to claim TDS refund? You should get complete insights on how it works and its process by the end of this article. Let’s get started.
Tax Deducted at Source (TDS) is a Tax in which certain amount of percentage is deducted by a Payer before making actual payment to the Receiver. Then Payer deposits the respective amount which he has already deducted with Government within certain period of time. When Payer deducts the TDS more than required, then Receiver is eligible to claim TDS Refund.
What is meant by TDS Refund?
TDS Refund occurs when tax amount deducted is higher than the actual tax payable. One can claim TDS Refund according to the type of TDS which is deducted from its income. TDS is of various types so as the procedure to get TDS Refund is also quite different.
Various types of Payments in which one can claim TDS Refund:
How to Claim TDS Refund on Salary when Employer deducts excess TDS?
When Employer deducts TDS more than applicable, then you can follow below basic steps to claim TDS Refund:
- You need to file ITR. While filing ITR, you need to ensure that the TDS amount is more than Tax payable and you’re eligible for refund amount.
- While filing ITR, it will prompt you to submit respective bank details such as Bank Account Number, Name of the Bank, Indian Financial System Code (IFSC). Basically, this makes it easier for the IT department to refund you the excess tax paid.
- In case you do not have taxable income, you can apply for a lower or NIL TDS certificate from your jurisdictional Income Tax Officer in Form 13 as per Section 197. You can submit the nil deduction order passed under section 197 to the TDS Deductor.
How to Claim TDS refund on Fixed Deposit Interest?
There are few ways in which you can claim TDS Refund on Fixed Deposit which are based on different scenarios:
Ø Bank has already deducted tax on your Fixed Deposit Interest considering that you fall under the respective tax bracket.
- In this case, you need to declare it in your IT Return. The interest amount and TDS can be identified from Form 26AS as well (This is available in your Income Tax Portal)
- Then Income Tax Department will automatically compute the refund and will directly credit it into your account
Ø If you are a senior citizen with fixed deposit accounts:
- Senior citizens are exempt from tax deduction on interest earned on fixed deposits. If your age is above 60 years and have fixed deposit accounts, you need to fill and submit Form 15H to ensure that bank does not deduct income tax on the FD interest earned.
- Alternatively, you can get the refund credited to your bank account when you file your IT return. The IT department then calculates the tax applicable to you and adjusts the excess tax paid and credits it back to the bank account you've mentioned in your income tax return.
Note: If your income does not fall under taxable category, then you need to submit Form 15G with bank before the end of financial year. This is to inform bank that you don’t have a taxable income. Henceforth, tax should not be levied on your income and the question of claiming TDS refund does not arise.
How to Claim TDS Refund on Professional Fees?
- If TDS is deducted under section 194J i.e. TDS on Fees for Professional and Technical services and;
- Your total Tax on net income is less than the TDS deducted, and then you can claim TDS Refund under section 194J by filing an Income Tax Return.
- You need to file Income Tax Return under Form ITR 3 (in case you have maintained book of accounts) or under Form ITR 4 (in case you do not have book of accounts. I.e. filing under presumptive taxation)
How to claim TDS Refund of Previous Years?
- It is possible to claim TDS of previous years as well for that you just need to file Income Tax Return in current year with some late filing fees.
How to Claim TDS Refund on Sale of Property?
- When a Property is sold, 1% or 0.75% from current year of TDS is deducted by the Buyer and then buyer needs to deposit it with the Government.
- The seller is allowed to take credit of TDS in his tax return. But if the seller wants to invest his gains in another asset, his gains will be exempt from tax and TDS will be refunded.
- To claim TDS refund, the process is same as above, wherein you’ll have to file the Income Tax return with appropriate bank account details.
What is the Time Period for TDS Refund?
The TDS refund period depends on various factors. If you have filed the ITR details on time, it can take anywhere between three to six months to receive the refund. The refund period will also depend on completing the e-verification. If you do not receive your refund on time, you may check with your employer to verify the Form 16, contact your Income Tax Office, or get in touch with Ombudsman - Income Tax Department.
Interest on TDS Refund
As per Section 200A of the Income Tax Act, 1961, if the income tax department is late in paying you the tax refund, then you are entitled for a simple interest of 6% p.a. on your refund amount. This interest starts accruing from the first month i.e. April of any financial year.
The interest earned on tax refund is also taxable since it is considered under 'Income from Other Sources'.
How to file complaint for a delay in Income Tax or TDS refund?
Even after applying for ITR, if you haven’t received your refund or there is a delay in receiving the refundable amount, you can get in touch with your Income Tax Officer to file a dispute. You will need to contact your Income Tax Officer in writing with all the necessary details and documents. If you do not receive a satisfactory response or any response for that matter, you can contact the Income Tax Ombudsman with the following details –
· Your PAN number
· Form 16
· Bank statement
· TDS certificate issued by your bank, and
All the documents that show the investments and earnings
How to Claim TDS Refund by Deductor and What are the Steps?
- Deductor can also claim for refund if he has deducted the TDS amount more than required.
- Following is the full-fledged process to filing a request for TDS Refund:
Step 1 – Login into Traces
Step 2 – Under Statements/Payments select the option of Request for Refund
Step 3 – Click on Proceed on the Refund checklist.
Step 4 – You have to select the type of challan for which refund is requested.
Step 5 – Select at least one reason from the list given for raising Refund request
Step 6– Click on View Challan Details after entering the challan details against which refund is requested.
Step 7 – Check out all the details shown for the challan and consumption (if any). Need to confirm all the checkboxes and click on I Agree to proceed ahead with the request.
Step 8 – In Request, Challan will get added. You can have the maximum of 5 challan per request. Click Proceed once all the challan is added.
Step 9 – Check out the name and communication address of the Deductor vigilantly which has shown as per the TRACES profile. Enter the respective bank details in which refund is requested.
Step 10 – Verification details of the user will be displayed along with the Proceed button for final submission. You can either click on Proceed for Submission or Back to cancel or make any changes in the refund request.
Step 11 – Check out the summary shown on the screen for the refund request and click on Submit Request Refund. In case, you want to edit any details then click on Edit button available for specified section.
Step 12 – You have to sign the application using the digital signature.
Step 13 – Make sure that you are taking print of the acknowledgment generated for Form 26B.
Step 14 – Within 14 days from the date of transmitting the data electronically, Furnish this Form 26B acknowledgment to your Jurisdictional Assessing Officer and failing to do this step will lead to rejection of your refund request.
A person who is seeking for TDS Refund can definitely get the respective TDS amount; by following standard procedure and keeping in mind all other associated provisions laid down by Income Tax Act ,1961.