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TDS Refund Status

TDS means Tax Deducted at Source. If any payment exceeds the specified or the maximum limit, as per the Income Tax laws, it is required to deduct the tax at source as per rates applicable. A person who pays the TDS is called the deductor and the person or company who claims the TDS is known as the deductee. It is the deductor’s responsibility to deduct the required TDS before making the payment and submit it to the Government.

The payment reflects on the deductor’s PAN Card, and the mode of payment does not influence it. TDS is generally deducted on the following payments:

  • Salary earned by an individual
  • Rent Paid
  • Professional fees
  • Consultation fees
  • Commission Payments
  • Interest paid by the banks

Yet, payments made to lawyers, doctors, and rent is not a part of the TDS payment slab.

TDS is treated as an advance tax, and the onus lies on the deductor to pay it to the government on time, and the role of the deductee is to claim the TDS refund while filing the income tax return.

The TDS form needs to be duly filled by the deductee and submitted to the central government, which can be done every quarter. Different types of TDS returns can be filed and registered using different forms. Based on the file that is registered by the deductor, the receiver gets the credit of the amount which was deducted at source in the assessment.

What is TDS Refund?

When the TDS Taxes paid are higher than the actual calculated tax payable, the need to apply for a TDS refund arises. It is a consolidated amount that is earned as income from various sources by the individual or a firm. We have an array of tax slabs, and as taxpayers, they must ensure the appropriate slab and the tax amount that logically needs to be paid.

The excess or the surplus amount that has been paid can be adjusted against the current liabilities of the deductor as per the direct tax act. When all the liabilities are cleared, the excess amount that is paid to the government will be refunded to the deductor.

Points to remember while Filing TDS Refund?

Before applying for a TDS Refund, the applicant should follow a few relevant points to avoid the hassle of filing a TDS Refund:

  • One must always plan the taxes at the beginning of the financial year instead of waiting till the end with deductions that should have never taken place
  • Tax payment charges account for 1% of the tax due, so this charge can also be avoided if well planned
  • One must be aware of all the deductions offered by the government and the appropriate claim procedures so that necessary action can be taken if the need arises

There are many causes and reasons under which the TDS Refund can be applied for. Some examples wherein one can fill the form to claim their TDS payments are as follows:

  • This is in case of salaried employees when the employer deducts more tax than applicable as per the ITR return filing. This can be simply done by filing an ITR Return and filing for a TDS refund by carefully mentioning mandatory details like bank name and IFSC code so that the refund process gets easier.
  • Another scenario could be if the income of the individual is lower than the tax slab mentioned, and banks deduct taxes on their respective fixed deposits or available balances with them. In such cases, the taxpayer should imitate by filling Form 15G and submit it to their bank, revealing that their salary does not fall in the categorized Tax Slab. Hence, no deductions will be made. In case deductions are still made, TDS Refund can be filed while filing the ITR Return file and the income tax department will credit the excess amount to the bank account of the taxpayer.
  • In case, if the individual is a senior citizen of age 60 years or above, he/she is exempt from tax deductions on his fixed deposit with the bank. Again, if one needs to fill Form 15G and inform the bank or else he/she could also apply for the TDS refund by filing the IT Return. Once the FDs mature, the individual may get a lump-sum amount, which could be quite hefty. In such a case, rather than paying a high tax amount following the high tax slab, since the amount has been accumulated over the period, it is better to pay the declared interest annually rather than paying a heavy amount at the time of maturity.

How to File a TDS Refund?

ITS or TDS Refund forms are available for all categories of Taxpayers. The deductor needs to recognize the category and download the required form after signing up at the official income tax website. He needs to fill the details correctly and submit It further.

The first step is to file an Income Tax Return, which is an imperative document to prove one's income status. It is more crucial than Form 16, which is just a proof of salary earned and tax deducted for a person, whereas ITR file is a source wherein one can display various sources of income and calculate the tax under the slab one fits in. 

Various Tax Slabs for Individuals below 60 years

Income (In Rs) Tax Payable (%)
Up to 2.5 Lakh Nil
2.5 – 5 Lakh 5
5 – 10 Lakh 20
More than 10 Lakh 30

Tax slabs for senior citizens

Income (In Rs) Tax Payable (%) for age 60-80 Tax Payable (%) 80 years above
Up to 2.5 Lakh Nil Nil
2.5 – 5 Lakh 5 Nil
5 – 10 Lakh 20 20
More than 10 Lakh 30 30

Required forms which need to be duly filled for an income tax return:

ITR Form Applicable for
ITR - 1 Salaried with income up to Rs. 50 lakhs
ITR – 2 For individuals with no income from proprietorship
ITR – 3 For individuals with income from proprietorship
ITR – 4 For individuals or firms opting for taxation scheme
ITR – 5 For limited liability partnerships, firms, Association of persons, artificial juridical person, Cooperative societies, Registered societies, Private discretionary trusts, local authorities and body of individuals
ITR - 6 For companies not applying for tax exemption under section 11
ITR - 7 For individuals and firms who need to submit ITR under sections, 139 (4A, B, C, D, E, F) under IT Act 1961.

Types of TDS Rates:

The different types of TDS Rates under the Income Tax Act and what is the percentage of deductions that should be ethically deducted:

Payment Section TDS Rate
Salary 192 The applicable income tax rate
The taxable part of PF 192A 10%
Interest received on securities 193 10%
Deemed Dividend 194 10%
Other interests 194A 10%
Winning from the lottery, games, etc. 194B 30%
Winning from horse race 194BB 30%
Insurance Commission 194D 5%
Life Insurance Policy - not exempt under section 10(10)D 194DA 5% of the income component
Commission or brokerage except for insurance commission 194H 5% if exceeds Rs. 15000
Purchasing land or property 194IA 1%
Payment of Rent of more than Rs. 50000 194IB 5%
Payment made towards the commission, brokerage, or professional cess above Rs. 50 lakh or same. 194M 5%
Cash withdrawal over Rs 1 Crore 194N 2%

Benefits of Filing TDS

Some of the benefits include:

  • It ensures the regular income of the government and helps in regularising the taxation system
  • It reduces the stress of paying a hefty amount as the tax that spreads the entire tax payment over months to make it easier for the taxpayer and easily pay his/her taxes
  • It is an easy mode of tax payment and tax receipt for both the taxpayer and the government respectively

Documents Required to Apply for TDS Refunds

Individuals, firms, and organizations can file for TDS refunds that have a valid TAN. They can use the RPU - Return Preparation Utility.

Any person who has TDS for:

  • Salary Payment
  • “Income on Securities”
  • Income through puzzles, gambling, lottery, and others
  • Winning horse races income
  • Insurance Commission
  • Payment towards NSS - National Saving Scheme and others

Documents need to be submitted to the IT department:

One needs to submit the following documents to the Income Tax Department:

  • TAN  
  • PAN 
  • Amount deducted
  • TDS payment 
  • Bank details with IFSC Code
  • Kind of payment
  • The applicant must validate the TDS statement using FVU - File Validation Utility
  • He/she must have a valid DSC - Digital Signature which is registered for e-filing

Penalty for TDS Return

The following penalties shall be applicable in case TDS returns are filed later than the due date, or if there are any discrepancies in return form:

  • Under section 234E – A late filing fee of Rs 200/- per day - maximum fees that you will have to pay will be limited to the amount of the TDS
  • Under Section 271H – A fee between the range of Rs 10,000 & Rs 1 Lakh will apply to the submission of wrong details like incorrect TAN, tax amount, PAN, etc.

No Penalty will be charged under Section 271H of the Indian Income Tax Act if TDS/TCS refunds are not filed for within the due date, only in the conditions mentioned below:

  • Filing of TDS return is done before 1 year of the due date
  • TDS, interest accrued, and late filing fee has already been paid to government’s credit

TDS Return Forms

The following are the types and purpose of various TDS return forms available:

Form Number Reason
24Q TDS - salaries
26Q TDS on all payments except salary
27Q Tax subtracted from dividend, interest or any other amount payable to NRIs
27EQ Tax at source Collection

Rules of TDS Return Filing

One has to follow the below-mentioned rules of TDS return filing to ensure an error-free process:

  • All columns of the control chart of Form 27A must be filled as the department will thoroughly verify it
  • Filling of forms - Form No. 27A, Form No. 24, 26, 27 and 27A with the accurate amount of money paid and the TDS
  • Mention Tan Number - Tax Deduction Account Number in Form No. 27A like how it is done in case of filing the e-TDS return
  • Make sure that all relevant information regarding the depositing of TDS are accurate
  • It is necessary to mention the 7-digit Bank Branch Code or the BSR code which is provided by the Reserve Bank of India. 
  • Use the ASCII clean text format to file the E-TDS Return. Software like Excel sheets, Tally, or Computex can be used, whatever is most convenient to use, ensuring to rename it with ‘txt’ as the filename extension. You can also file an online return by using Return Prepare Utility available at NSDL website
  • TIN-FC’s which are managed by NSDL can be used to file the physical returns found across India
  • Online returns can be submitted directly at the NSDL TIN website. The signature will be a digital signature
  • In case the information provided while filing the return is accepted, a receipt or a token number will be provided, and in case of rejection of the file, a non-acceptance memo will be provided with reasons why the file has been rejected

To validate the TDS Return File:

  • The required and correct details of the applicant should be filled in the file
  • Update the file in the portal validation utility tool available on the NSDL website for free
  • The FVU will accordingly report any error
  • Through the FVU, one can make relevant changes and properly verify the file before submitting

Features and Benefits of Applying for a TDS Refund

Let us discuss the key features and core benefits of applying for TDS refund:

  1. Features of Filing TDS Refund:

    Every company, firm, institution, or individual is required to pay TDS on any payment made at the source. The Government provides regular benefits of exemptions and deductions to regular taxpayers, but it also imposes penalties on those who evade tax. It also provides relevant assistance through experts, professionals, and various other departments to help taxpayers get their TDS refunds applied for within the stipulated time. 

    A beneficial alternative is to file the TDS refunds online as it ensures:

    • Accuracy: It helps the taxpayer to self-calculate the tax liability with utmost accuracy in tax calculations and applications of various deductions and exemptions available through online support.
    • Prompt Processing: Estimation and processing of TDS refund claims becomes easy and trackable, and the processing of the refund is quick and prompt.

    • Convenient: It is much easier for the taxpayer to conveniently use auto filing and automated options than filing up several tax papers offline.

    • Payment of Tax and Receipt of Refunds: E- Filing of tax and TDS refund through online software makes it much easier for the taxpayer to accumulate receipts and maintain documentation rather than going offline.

    • Proof of Receipt and knowing TDS Refund Status: Just with a few clicks, it is easy to maintain and submit the documents and retrieve all proofs of receipt of any payment made. The on-going status of the refund is easily comprehended and available at the website.

    • Assess ability and Record Maintenance: Maintenance and storage of records become easier and accessible as returns submitted as refunds claimed in the past are on the tax portal online, which saves the time and effort of the taxpayer in redoing them again and again.

  2. Benefits of filing TDS Refunds:

    Some of the core benefits of filing TDS return:

    • Claiming a TDS Refund which is the main criterion
    • It also helps in applying for loans if required
    • It helps in carrying the losses forward to the next financial year
    • It is an essential document that can be used as proof of address and income
    • For immigration and emigration purposes this document holds a lot of relevance
    • This also helps in availing high life coverage under insurance policies
    • It helps is starting up your own business
    • Filling TDS Refunds avoid paying penalties

Claim Process of TDS Refunds

Here’s a rundown to the claim process of TDS Refunds:

  1. TDS Refund Period

    IF the ITR details have been filed on time, it can take three to six months to receive a refund. It depends on the time taken to do the e-verification, and if it takes more time, the individual can take appropriate action to check for the status of the refund.

  2. TDS Refund Status

    You can check the TDS refund status by the following methods:

    • Use the PAN card number and verify details on the website - https://incometaxindiaefiling.gov.in/
    • Checking the status by calling the CPC Bangalore on their toll-free number - 1800-4250-0025

    Different kind of refund statuses that one may see in their e-filing portal profile - 

    To check for the current status, the applicant would have to check the e-filing portal profile after filling in the assessment year along with the individual/firm’s PAN Card number. The steps that one should follow are:

    • Login to IT departments official website and go to the view forms section, or view returns tab
    • From the drop-down menu, select the Income Tax Returns option
    • Then, check the status of the refund
    • If it says pending for verification, one needs to verify again by punching in their Aadhar card number or other details as asked until it says it is under process
    • An acknowledgement number will be issued and further details and status can be checked using the code
    • If the refund is already processed, the mode of payment will also be mentioned, if it has been through ECS, cheque, or any other mode
    • Finally, when the IT return is processed, one can check the TDS refund online by visiting the TIN NSDL website by using their PAN card and the year of assessment and selecting the status of tax refunds option stated there

    The portal could display any of the below 11 statuses, and the meaning of each is as follows:

    • No e-Filing has done for this assessment year: This may appear if one has not filed the return at all or of the form was submitted physically.

    • Not determined: This means that the refund has not been ascertained, and the department is still working on the form.

    • Refund paid: This means that the refund has been processed and the applicant needs to check his bank account or the mode of payment section to verify the refund.

    • No demand and refund: This means that the income tax department does not owe any refund of the filed amount. Here could be a discrepancy in the report that as submitted and their report, which has been verified. In case of any reported errors by the applicant, he can rectify them and re-apply for the TDS refund.

    • ITR processed determined refund and sent to Refund Banker: This means that the refund calculated is still under process, and it will be uploaded soon.

    • Refund unpaid: This means that the IT department tried a refund, but either the bank has refused to accept the funds or the details are given were inaccurate. Even a single mismatch in the address could result in this.

    • Contact jurisdictional Assessing Officer: This means that the department requires further details or more information, and the applicant must provide his details with the jurisdictional Officer for more details.

    • Demand determined: This means that the refund application has been rejected. Instead, the department demands more money as tax, which is liable to be paid. The applicant has to follow the procedure, or if he/she would like to amend the initial form, then one can re-apply by correcting the previous details.

    • Rectification processed determined refund and out to Refund Banker: This means that the ITR rectification request has been accepted and processed.

    • Rectification processed demand determined: This means that the rectification has been accepted, but the applicant owes more money as taxes to the department, which needs to be paid within 30 days of receiving a notice on the same.

    • Rectification processed no demand, no refund: This does not mean that the rectification in the form and details has been done, but does the applicant owe anything to the department, nor is he applicable for any kind of refunds.

FAQ's

  • Q: What is a claim under 80G?

    Ans: Under section 80G, the individual or firm can claim extra deductions like donations made towards charitable institutions.
  • Q: What are the different ways through which they can apply for TDS Refunds?

    Ans: There are multiple ways like doing it in paper form, electronically with a digital signature or through an electronic verification code, or by both – manual paper form and electronic way.
  • Q: What is the consequence if the TDS Refund is not applied for in the stipulated time?

    Ans: If the timeline is not followed appropriately, then a fee under section 234F will be applicable till 31st December of the specific assessment year – generally, Rs 5000 or Rs 10000 if the total income is above Rs 5 Lakh.
  • Q: If any correction needs to be made on the form submitted for TDS Refund, how is it possible?

    Ans: Corrections can be made electronically in the stipulated time if any kind of correction needs to be made on the paper form or the electronic form.
  • Q: Is there any disadvantage of not filing for a TDS Return?

    Ans: No, there is no disadvantage; the only disadvantage is that an excess amount is paid as a tax by the deductor.
  • Q: If there is any delay in receiving the TDS Refund, how can I raise a complaint?

    Ans: In case of any delay in receiving the amount of the refund of TDS, one can raise a complaint with the Income Tax Officer or the Income Tax Ombudsman electronically or through a letter furnishing with their details like their bank statement, PAN Card, Form 16, documents declaring their earnings and investments and the TDS certificate issued by the bank.
  • Q: Who should be required to issue the TDS certificate?

    Ans: Under section 203, any firm or even individual banks who deduct the TDS is required to provide a certificate of TDS to the payer. For example, form 16 is given by the employer o the employee as recognition of TDS paid by the employee. In the case of claims of deductions, it is not mandatory to issue the certificate of TDS.
  • Q: Is there any interest in the TDS Refund?

    Ans: Under section 200A of the ITA, in case of any delay from the department's end to provide a refund, the applicant is entitled to earn an interest of 6% p.a. It won't be applicable if the amount of refund is lower than 10% of the total tax payable in that specific financial year.
  • Q: What if there is any discrepancy in the actual TDS and the TDS credit as per Form 26AS?

    Ans: The taxpayer needs to submit details like name, amount, PAN number, name of the deductee, and submit it, which will be further updated by the IT department on Form 26 AS of the deductee. In case of any discrepancy in the information mentioned above, there could be a difference in both the amounts in which case the deductee must try to resolve this with the deductor. The onus of providing the relevant information to the government lies on the deductor, so in case of any discrepancy, it will hamper the process of the TDS refunds. So, the difference should be immediately corrected in Form 26AS, and the deductor should only furnish relevant and correct information.
  • Q: Can a claim on a TDS refund be made for subsequent years?

    Ans: No, TDS refund claims now tend to be claimed for previous years but not for subsequent years. A claim can only be filed when the tax is paid. An assumption on futuristic payments and refunds of TDS or any tax levied by the government is not possible.
Written By: Paisawiki - Updated: 10 November 2020