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The TDS is that tax which is deducted at source i.e. from an individual’s salary before it gets credited to employee’s account. It is usually done by a pre-determined deductor. Otherwise, generally, TDS is deducted each month by employers based on tax projections declared by the employee at the beginning of each financial year. The TDS taxes are collected under the Income Tax Act, 1961 and is managed by the Central Board for Direct Taxes (CBDT). It falls under the part of Department of Revenue and is therefore managed by Indian Revenue Services (IRS). It is also vital at the time of conducting an audit.
Also, TDS is becoming significant in the following ways.
Taxes are collected regularly and are a continuous mode of income for the government.
In addition to the above, it benefits the payer too. As the tax which is distributed throughout the year and is deducted every month, causes less tax burden at the end of the year.
Therefore, this process is crafted in such a way that the government is able to collect taxes without the help of the Income Tax department and without their intervention.
If you have made your financial declarations at the beginning of the year, which is lesser than the investment proof’s submitted at the end of the financial year, then you are entitled for a refund of taxes.
Or, in simple terms, it is observed that the investment projections declared during the start of a financial year are lesser than the actual investments made at the end of that year. However, in case the total tax deducted at the end of a financial year is higher than the income tax you are supposed to pay for that particular year, a TDS refund comes into force.
Sumit works with an MNC in Bangalore. But, he was late in submitting his document for IDFC premium which is exempted under 80C section. Hence, an extra amount of Rs. 10,000 extra deducted as TDS.
The total tax to be paid by Sumit for 2017-18: Rs. 40,000.
The tax that got deducted from Sumit’s salary: Rs. 50,000.
Sumit’s eligibility for tax refund is: Rs. 50,000 – Rs. 40,000 = Rs. 10,000.
Thus, with the above example, it is clear that Sumit had to pay a total tax of Rs. 40, 000. However, he ends up paying Rs. 50, 000 due to not giving the insurance premium payment receipt on time to the employer, thereby paying extra in taxes.
Let’s take another example where Ashish was not able to invest his Rs. 30,000 in the time allotted by his employer. He couldn’t make up his mind whether to go on investing in life insurance policy or get a fixed deposit for long term savings. And amidst this confusion, he missed the last date to submit the income tax proof as asked by the employer which was 30th January. And in this way, Ashish ended up paying more tax for the financial year even though he had done the investments in the first week of March for the concerned year.
Therefore, these are some of the conventional situations that are faced by the salaried individuals every year and so TDS refund process comes into action. The early you file the income tax return the earlier you can get your TDS refunded.
1) One has to file a TDS refund in case where the employer deducts TDS over and above the actual tax liability. As seen in the above example, the difference between the tax deducted by the employer, and the actual tax that is payable can be done by filing a claim in form of income tax return. Also, at the time of filing the tax return, the tax payer needs to mention his/her account number, bank name, and IFS Code. So, in this way income tax department can easily return the excess tax via an account transfer.
Point to remember: In case, in any financial year you know that the TDS is payable, then under section 197, you can file Form 13 to get a benefit of lower or nil income tax deduction. Post that, the certificate that is received by you has to be submitted with the authority that is entrusted with deducting your TDS.
2) If your income tax is less but the bank is deducting tax on the fixed deposits where the income is not available under the income tax bracket but the bank has deducted the income tax, a refund can be claimed in two ways.
You can declare this income in your income tax return and then the Income Tax department will refund the amount in your bank account.
You can also file Form 15G with your bank, the concerned bank realizes that your salary does not fall under any tax slab. Hence, no tax should be deducted at source at the time of maturity.
3) However, in case of senior citizens, the ones who hold fixed deposits with bank are exempted from the income tax deduction from the interest earned on the fixed deposits. So, if you are 6o years or above and have fixed deposits in banks and interest is being taxed, you can then fill form 15H for no deduction of income tax from the bank. This will pave way for no deduction of income tax from the bank on the interest of FD.
Post which you can get returns credited to your bank account by claiming it in your Income Tax returns.
Point to remember: When you declare income from the Fixed deposit at the time of maturity, then the lump-sum amount should be mentioned, or this can attract hefty and higher tax slabs (Since it attracts high income for that period of time). Therefore, it is advisable to declare income annually rather than declaring it at the time of maturity.
Filing for Income Tax process is simple. All you have to do is visit or click on www.incometaxindiaefiling.gov.in
You need to login or sign up to download the relevant form for refund of income tax and enter all the particulars in the form and submit. The Income Tax Return forms are available for various categories and one needs to choose the form that is applicable to your income category.
In case your employer has deducted income tax in spite of you not being eligible for it, you can claim that amount by filing the ITR (Income Tax Return). ITR is also applicable in a situation where you have paid more than the required tax amount.
The IT department will calculate and review the taxable amount based on the details provided by you. And, in case you are eligible for a refund, you will receive the excess amount in your bank account directly or as a cheque, drawn in your name.
In case you haven’t received your refund even after applying for ITR or if there is a delay, then you can get in touch with your Income Tax officer to file a dispute. You need to provide all the necessary documents and details. And in spite of this, if you do not receive any satisfactory response you can contact the Income Tax Ombudsman with the following details:
Your PAN number
TDS certificate issued by your bank, and
All the documents that show the investments and earnings
What are the different types of refund statuses that are available on Income Tax site?
No determination : In case the refund of the tax has not been determined by the IT department to process the same.
E-filing not done for this assessment year : In case the ITR was done offline/ physically but was not done online, then the status of the same will be updated online and the same can be taken as no ITR filed at all.
ITR processed and refund determined and send to Refund Banker : This status means that the ITR has been checked and refund has been determined and hence, it is being processed. Here, the taxpayer will have to be patient until the process is completed.
Contact jurisdictional Assigning Officer : This means that the Income Tax department further wants some more clarification or details on your ITR. And so you have to get in touch with the Jurisdictional Assigning Officer to provide the documents/details what are required.
Refund unpaid : This means some details like the bank account number or address on the ITR are not correct and hence, the IT department cannot process the refund.
Demand determined : This literally means that the refund has been rejected and it is found that you need to pay more tax to the government.
Will a person get his TDS refund if he forgets to mention his bank details on the claim form?
No, the IT department will not be able to transfer funds in case he/she forgot to mention the bank details. Also, it is vital to mention these details correctly so as to avoid the funds getting transferred to someone else’s account.
Can the contact details filled on ITR be updated later on?
Yes, the contact details can be edited on the profile settings of the e-portal page. Or you can update or change your address, mobile number or email id in this section of the portal.
How do I change my address so that I don't miss the refund cheque?
All you can do is, log on the e-filing portal and raise a refund re-issue request. However, this can only be done if you did not receive the refund cheque and it was returned to the Income Tax Department. And in case someone else has already collected it in your name, the taxman will no longer be responsible for the amount.
Can I apply for TDS refund offline?
No, the deductor cannot apply for refund offline.
Can the deductor cancel the Refund request once submitted?
The Refund request can be cancelled only before Assessing Officer’s (AO) approval. If AO has approved the request, it cannot be cancelled.