If there is an excess deduction of tax at source, the deductor can claim for a TDS refund of the excess amount that is deducted.
The difference between the TDS (tax deduction at source) and the actual amount that is paid by the deductor, whichever is more will be considered as the excess amount. It is then adjusted against any current tax liabilities and the remaining amount is then refunded.
If you are expecting your TDS refund and wondering where it is stuck, then you can easily check and rectify it online by following the procedure laid down for TDS refund online.
TDS return process has been made fully electronic for the ease and convenience of the tax filer. So, if you have not received your refund, you can track the TDS refund online on tax information network website of the Income Tax department.
Understanding the Concept of TDS
TDS is basically the full form of tax deducted at source. Any person or company making the payment is required to deduct tax at source if the payment exceeds the specified/maximum limits. As per the Income tax laws, TDS has to be deducted as per the rates set by the tax department.
A person or a company, which pays the amount after deducting the TDS, is known as the deductor. And the person or the company receiving the payment is known as the deductee.
It is the responsibility of the deductor to deduct TDS prior to the payment and then deposit it with the government.
TDS deduction doesn’t not depend on the mode of payment, whether it is via cheque, cash, or credit–and it is linked to the deductor’s PAN and is deducted.
Tax at source is deducted on the below-mentioned payments-
- Rent Payments
- Commission Payments
- Interest paid by Banks
- Professional Fees
- Consultation Fees
However, TDS is not applicable to the payments made by individuals are for rent, and the payments made to the doctors and lawyers.
TDS is a kind of advance tax and it has to be periodically deposited with the government by the deductor. The onus of depositing the TDS lies with the deductor and the role of deductee is restricted to claiming the TDS refund while filing the Income Tax Return.
What is TDS Return?
Tax deducted at source has to be deposited by the deductor to the central government by filling all the details in the TDS return form.
TDS return is filed quarterly and the different types of tax deductions can be filed through different forms for TDS return.
Basically, the concept of TDS requires the person responsible to deduct taxes appropriately as per the specified rates, for the payments of specific nature that are being made to a particular recipient.
Based on the certificate issued by the deductor, the receiver from whose income tax is deducted at source gets the credit of the deducted amount in his personal assessment.
What is the Procedure for TDS Refund?
If there is an excess deduction of TDS, the deductor can claim for a refund of such excess tax deducted at source. The excess amount will be refunded as per the specified procedure for TDS refund.
The difference between the TDS or deductible and the actual payment made by the deductor whichever is considered as the excessive amount. This amount is then adjusted against any current tax liabilities (as per the Direct Tax Acts). Once all the liabilities are paid, the remaining amount will be refunded.
Who is Accountable to Deduct TDS?
The TDS deduction from the income is required by the statute, which is under the head salary.
The “employer-employee” relationship is an essential condition for taxing, under the head salaries, of particular receipts.
Such a relationship exists when the employer directly controls and supervises the employees and lays down the instructions to monitor the control. As per the Income tax laws, a tax deduction is required when-
- The employer makes the payment to the employee
- When salary is paid to the employee
- The income which is lower than the maximum amount of head salaries is not chargeable to tax.
Here are a Few Reasons for Delay in TDS Refund
- If you have entered a wrong IFSC code, then also your TDS refund would not be processed. The bank department would not be able to identify your bank details with the wrong IFSC code.
- If there is a credit mismatch, then also you would need to file a rectification in your TDS refund online. Under section 154, a rectification can be filed for mismatch in advance tax or tax credit. Also, wrong gender details and errors in additional details are not accepted.
- Any change in total income would also call for filing a revised tax return/TDS return. You would also be restricted from claiming new exemptions and deductions.
- A mismatch in the tax deducted at source. This happens when the tax credit is not similar to the tax deduction entries on FORM 26 AS. You can check this under the accounts section when you log into the e-filing site.
- In case of a mismatch, you can file a rectification. If you find a mistake in your FORM 26AS, you should inform your concerned TDS deductor, bank or your employer.
- If you have outstanding liabilities, then also your income tax refund would not be processed. Under Section 245 of the Income tax act, the assessing officer can help you adjust your refund of unpaid dues from the last year. You would receive an email notification to file for income tax rectification. In certain cases, your Chartered accountant (CA) can also help you rectify it or sought the information.
What Does Your Refund Status Mean?
To know the status of your tax refund/TDS refund online, you would need to provide your PAN card number along with the tax assessment year.
- No e-filing has been done this year - You would need to re-verify your income tax return, as your return is not verified or filed.
- Refund determined and sent out to refund banker - This indicates that your income tax return is under process and your application has been forwarded to the refund banker.
- Refund Unpaid - If you have submitted wrong IFSC code to the tax department, then your refund won’t be processed. Suppose you have an SBI account and you have entered wrong details under IFSC CODE State Bank of India, then you would have to correct it under the Income-tax website under refund re-issue request.
- Refund Paid - it means that the refund has been sent. In case you haven’t received it, then you would need to check it with your bank.
Your status would be shown as ‘Not Determined’ if you have submitted your application in the past one month. If it has been longer than that, your application would read as being sent for a refund. And you would soon get money refunded in your account. If your refund status is different, then it means that your application is stuck.
If the ITR is filed and you are waiting for your TDS refund, then you can check the TDS refund online on the TIN NSDL website or on the official site of the Income Tax Department. All you need to do is log on the site with your registered PAN number.
- Log on to the Income tax department’s site; go to the View Returns and Forms option.
- Select the Income Tax Returns option from the drop-down menu and you will be directed to the Income Tax Returns page.
- There you can check if the ITR has been verified or is processed or is still pending for verification.
- In case the ITR is pending for verification, you can verify it again online using your Aadhaar based OTP. You can also send the signed ITR-V/ITR Acknowledgement to the Income Tax CPC office at Bengaluru via speed post or ordinary post (except via courier)
- The status will appear as successfully verified and after few days it will appear as ITR Processed.
- Once the ITR is processed you can click on the acknowledgment number and check if the refund amount has been paid or not.
- If the refund is initiated it will also showcase the mode of payment.
- If the payment is made through Electronic Clearing System or ECS, you can check your bank statement if the amount has been credited or not.
- If the refund was initiated through a cheque, it will reflect in your account after a few days of the payment. If the cheque remains undelivered, you will have to update the address on the link provided and then the cheque will be re-issued.
- Once the Income tax return is processed, you can check the status for TDS refund online on the TIN NSDL website. Just select the Status of Tax Refunds option, enter your PAN number, and the year of assessment
TDS Refund FAQS
1. What is the rate at which TDS is deducted?
Under the purview of Section 192, the employer deducts the TDS on the amount to be paid at the average rate of income tax. It is to be calculated on the basis of the rates applicable as per the Finance Act for that particular financial year in which the payment was made.
2. Who is required to issue a TDS Certificate?
Under the purview of Section 203, any individual or company deducting the TDS is required to furnish a certificate to the recipient regarding the tax deduction along with other required details. It is known as the TDS certificate. It is also applicable to the banks that deduct tax for the payment of the pensions.
A certificate has to be issued in Form 16 if the employees are paid salary inclusive of their pensions. It has to be issued in the deductor’s own stationery.
However, it is not obligatory to issue a TDS certificate if the tax at source is not deducted by virtue of claims of deductions.
3. How to apply for ITR or TDS Refund?
It is quite simple to filing your Income tax/TDS return- Simply visit the official site of Income Tax- www.incometaxindiaefiling.gov[dot]in
Download the required form from the site and fill all the particulars and then submit the form online. The ITR forms are available for different categories and you can to select the form, which applies to your income category.
4. How to raise a complaint for a delay in receiving TDS Return or Income Tax Return?
If you have applied for ITR and you have still not received your TDS refund, or if there is a delay, you can write to your Income Tax officer.
You need to furnish all the required details and documents to get the refund amount. Despite this, if you do not get any satisfactory response then you can write to the Income Tax Ombudsman with the below-mentioned details:
- Bank statement
- Your PAN number
- TDS certificate issued by your bank
- Form 16
Documents declaring your earning and investments