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.
Example of How TDS Refund Is Calculated?
Understanding TDS refund is easier with a simple example. Think of it as a simple comparison. How much tax you actually owe vs how much tax has already been paid on your behalf through TDS and advance/self assessment tax.
Example scenario
- Person: Resident individual below 60
- Financial Year: 2024–25
- Income details:
- Salary income (as per Form 16): ₹7,50,000
- Bank interest income: ₹20,000
- TDS already deducted:
- TDS on salary by employer: ₹45,000
- TDS on bank interest (10%): ₹2,000
Now, let us see how the refund is calculated.
Step 1: Compute total taxable income
- Salary: ₹7,50,000
- Interest: ₹20,000
- Standard deduction (salary): ₹50,000
Total taxable income = ₹7,50,000 + ₹20,000 – ₹50,000 = ₹7,20,000
Step 2: Calculate tax on total income (old regime example)
- 0 to ₹2,50,000 → Nil
- ₹2,50,001 to ₹5,00,000 → 5% = ₹12,500
- ₹5,00,001 to ₹7,20,000 → 20% on ₹2,20,000 = ₹44,000
Total basic tax = ₹12,500 + ₹44,000 = ₹56,500
Health & education cess @ 4% = ₹2,260
Total tax liability = ₹56,500 + ₹2,260 = ₹58,760
Step 3: Compare with TDS already paid
| Particulars | Amount (₹) |
|---|---|
| Total tax liability | 58,760 |
| TDS on salary | 45,000 |
| TDS on bank interest | 2,000 |
| Total TDS / tax already paid | 47,000 |
Since your total tax liability (₹58,760) is more than the total TDS (₹47,000), there is no refund in this example. You must pay the balance tax.
Balance tax payable = ₹58,760 – ₹47,000 = ₹11,760 (as self-assessment tax while filing the ITR).
Now, see a refund example quickly
If in another case:
- Total tax liability (after calculations) = ₹40,000
- Total TDS already deducted = ₹55,000
Then.
Refund = TDS paid – Tax liability = ₹55,000 – ₹40,000 = ₹15,000
This ₹15,000 will be shown as “Refund” in your ITR calculation and later in your 143(1) intimation, and will be credited to your registered bank account if all details are correct.
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 Your TDS Refund Status Online?
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”
How to Claim Your TDS Refund + Delay & Reissue Process?
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
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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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How can I check the status of my TDS refund?
You can check TDS refund status by logging into the income tax e filing portal and viewing your filed ITR and refund status for that assessment year. You can also use the refund status service (with PAN and assessment year) and verify if the refund is issued, adjusted or failed
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What should I do if my TDS refund is delayed or not credited?
First, check refund status on the portal and confirm your bank account is pre validated and ECS enabled. If the status shows “refund failed” or “expired”, submit a refund re issue request. If it shows “adjusted against outstanding demand”, review the demand and respond or pay, as needed.
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Can I claim a TDS refund if excess tax was deducted by mistake?
Yes. If excess TDS was deducted, you can claim a refund by filing your ITR with correct income and full TDS details. The system will compute tax payable and excess will be refunded. If you already filed with mistakes, file a revised return within the allowed time to correct it.