Tax Deducted at Source (TDS) is a type of tax deducted from the income as per the specified percentage (%). Before understanding the TDS refunds, we should understand about TDS.

  • TDS range: It ranges from 1% to 30% of the actual payable amount.
  • Eligibility: When the amount payable is lower (to the employee) than the amount already deducted as TDS.
  • Challan ITNS 281: It is a Challan form for the payment of TDS and TCS). This is applicable to both corporate as well as non-corporate organizations.
  • E-Payment of TDS: The IT Department provides an online option to pay direct taxes only. The taxpayers just need the net-banking services from the authorized banks.
  • TDS refunds period: It can take around three to six months to receive the refund. Refund depends on factors such as when the ITR is filed, e-verification etc.
  • The penalty for late filing of TDS return: A penalty of Rs. 200 (per day) is charged until the TDS return is filed.
  1. This fee is applicable until the fine amount is equal to the total liable TDS amount.
  2. If the taxpayer exceeds the 1-year time limit to file the TDS return or furnishes incorrect details of PAN, TDS amount, then they have to pay a penalty ranges from Rs. 10,000 to Rs. 1lakhs.
  • Advantages of TDS: Advantages as follows:
  1. Prevents tax evasion
  2. Widens the tax collection base
  3. Stable source of revenue for the government

TDS Returns Due Date

TDS Refunds

Situations when TDS can be claimed

Situation 1: When employer deducts more tax, then applicable to you as per the IT return

In case, there is a mismatch between tax deducted by the employer and the actual tax payable. Bank name and IFSC code shall be mentioned correctly so that it is easier for the IT department to return the excess tax paid.

Situation 2: If income is below the tax slab and your bank deducts tax on the fixed deposit

If the income does not fall under the income tax bracket and the bank deducts the tax on the fixed deposit interest, then the person can recover its tax amount as:

  • By filling TDS refunds and submitting to the bank and telling them that the salary is below tax slab bracket. For senior citizens, this limit is Rs. 3lakhs.
  • Declaring it in the income tax return form and the IT departure would automatically compute the refund and credit it into the bank account.

Situation 3: If you are a senior citizen with fixed deposit accounts

Senior citizens (60 years and above) are exempted from tax deduction on interest earned on fixed deposits. They are required to fill and submit form 15H to ensure that bank does not deduct income tax on the FD interest earned.

TDS Refunds Example

Example 1:

Raman works with an organization in Pune. In the previous year, he delayed in submitting the documents for LIC premium exemption under section 80C. As a result, the organization deducted around Rs. 10,000 extra as TDS. How much can Raman claim for the extra TDS deducted?

Solution 1:

Let us assume that,

Total tax payable by Raman in the year 2015-2016 = Rs. 30,000

Tax deducted by the employer from Raman’s salary = Rs. 40,000

Raman is eligible for tax refund = Rs. 10,000 (Rs. 40,000 – Rs. 30,000)

Raman’s total income tax paid for last year is Rs. 30,000 but actually it should be Rs. 20,000. He ended up paying extra because he could not submit his LIC premium receipts on time.

Example 2:

Similarly, as Raman, Shamim is willing to invest Rs. 40,000 but within the time line set by his employer. He just could not decide to go for a long-term fixed deposit or a life insurance policy, but he misses the deadline.

Solution 2:

While Shamim, made the decision about the investment, he missed the cut-off date for the tax proof submissions i.e. is set by the employer. At the end, he ended up paying more tax even when he did invest that amount before the financial year closed but missed the deadline for proof submissions.

These are common situations that are faced by a lot of people almost every financial year. The only way to get this extra tax back is to file income tax return on time.

Important points

  • Collection of Documents Required

Bank documents: pass book, cheque book etc.

Loans documents: Home loan interest certificate as it gives a detailed information about the interest and the principal amount paid, both of which can be claimed as a deduction.

Form-16: Important document for salaried individuals, it includes investments; salary and tax deducted and is issued by the employer, annually.

  • Claiming for deductions

Section 80TTA is a common deduction that most people forget to claim. This allows a tax deduction on interest income from bank savings account of up to Rs 10,000. This also includes tuition fee, life insurance funds, provident funds which form an integral part of Section-80C.

  • Checking Form 26AS

This is another important step where we need to download form 26AS and check whether the entries in Form-16 and Form-26AS, matches or not.

  • Paying Outstanding Taxes

This includes additional taxes to be paid to the bank for fixed deposits and self-assessment taxes.

  • Filling Fields Correctly

  1. Enter the same name as mentioned on the PAN card.
  2. Taxpayers with a passport must enter their passport number in the income tax return.
  3. People who have Aadhaar Card should mention in the income tax return.
  • Review and File

Review it before the submission to the Income Tax Department.

In case you are confused about TDS Return Filing as a deductor, feel free to consult the experts at LegalRaasta. You can get comprehensive assistance with our TDS Return Filing Software which supports TDS on Salary payments (Form 24Q), Rent, Interest, Commission and other Non-salary transactions (Form 26Q), NRI (Form 27Q)and TCS (Form 27EQ).