TDS Refund Process: How to Claim Your Refund
Sometimes, more tax is deducted from your income than what you owe. This extra tax can be claimed back from the Income Tax Department as a refund. To understand how to claim TDS refund, this blog will guide you through the process step by step, including when you can claim, what forms to use, and how to check your TDS refund status.
What is TDS Refund? And Its Examples
TDS is a way for the government to collect tax in advance. However, the deducted amount can sometimes exceed your actual tax liability. This excess is called TDS overpayment and can be claimed as a refund.
- Example 1: Your bank deducts ₹10,000 as TDS on fixed deposit interest, but your final tax liability is ₹7,000. You can claim a refund of ₹3,000.
- Example 2: If you are a freelancer earning ₹2.5 lakh annually (below taxable limit) and TDS is deducted, you can claim a full refund.
When Can You Claim a TDS Refund?
You can claim a TDS refund while filing your income tax return (ITR) for the financial year in which the tax was deducted. The refund is applicable if:
- Your total income is below the taxable limit
- TDS was deducted at a higher rate than applicable
- You forgot to submit investment proofs for deductions
- There were calculation errors in TDS deduction
How to Check & Verify TDS Refund Status
After filing your return, check your refund status online by:
- Visiting the TIN NSDL website
- Entering your PAN and assessment year
- Filling the captcha and submitting
- Viewing your refund status: processed, sent, failed, or not determined
- Alternatively, check refund details on the Income Tax e-filing portal > “View Returns / Forms”
Steps to Claim TDS Refund
Follow these steps to claim your TDS refund smoothly:
Calculate Total Tax Liability
Determine your total income and compute tax payable after deductions.
Collect TDS Details
Use Form 26AS or Annual Information Statement (AIS) to verify all TDS entries for your PAN.
File Income Tax Return (ITR)
File your return online stating TDS deducted and your actual tax liability.
Verify Your Return
E-verify using Aadhaar OTP, net banking, or digital signature certificate (DSC).
Wait for Refund Credit
Refund credited to your bank account linked to your PAN once processed.
Interest on TDS Refund
If the refund process is delayed, you may receive interest under Section 244A of the Income Tax Act:
- Interest rate of 0.5% per month (6% per annum)
- Applies to refunds exceeding ₹100
- Interest calculated from filing date to refund date
- Interest amount is taxable and must be declared in your next ITR
Common Reasons for TDS Overpayment
- TDS deducted on income below taxable limit (e.g., senior citizens)
- Non-submission of Form 15G/15H to banks
- Multiple TDS deductions from different sources
- Incorrect PAN provided to the deductor
- Higher than applicable TDS rates applied
- Missed tax-saving deductions when calculating total tax
Tracking your TDS records carefully can help avoid these issues.
TDS Refund Form and Filing
There is no standalone form for TDS refund. You claim it through your Income Tax Return (ITR). Use the appropriate ITR based on your income type:
- ITR-1: Salaried individuals and pensioners
- ITR-2/3: Individuals with business or other income sources
- ITR-4: Presumptive income taxpayers
Make sure your bank account is pre-validated and linked to your PAN for refund credit.
I am a Chartered Accountant with 5 years of experience specializing in GST, income tax, and HSN code classification. I help businesses with GST compliance, tax planning, and financial advisory, ensuring they meet regulatory requirements while optimizing their tax strategies. I aim to simplify GST filings, income tax laws, and HSN code classifications, helping professionals and business owners stay informed and compliant.
Frequently Asked Questions
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What is TDS Refund and how does it work?TDS refund is the return of the excess tax deducted from your income. You claim it by filing your income tax return, and the refund is credited to your bank account.
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When can I claim a TDS refund?You can claim it while filing your ITR for that financial year. The earlier you file, the sooner you get the refund.
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How can I check and verify the status of my TDS refund?Visit the TIN NSDL or income tax portal and enter your PAN and assessment year to check the status online.
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What are the common reasons for TDS overpayment?Common reasons include income below the taxable limit, wrong TDS rate, missed deduction claims, or failure to submit Form 15G/15H.