TDS Refund Explained: Claiming Excess Tax with Simple Steps

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.

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.

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.