How to Claim TDS Refund for Excess Tax Deducted
- Asharam Swain
- 2 days ago
- 10 min read
When the tax deducted at source (TDS) exceeds your actual income tax liability, the excess amount becomes refundable under the Income Tax Act, 1961. To receive this refund, a taxpayer must file an Income Tax Return (ITR) for the respective financial year, ensuring all income, deductions, and exemptions are correctly reported. The process involves filing, verification, and refund credit to the taxpayer’s registered bank account. Understanding the steps and timelines helps avoid refund delays and ensures accurate compliance with the law.
Table of Contents
Understanding TDS Refund Under Income Tax Act, 1961
Tax Deducted at Source (TDS) is a mechanism under the Income Tax Act, 1961, designed to collect tax at the source of income. However, there are instances where the total TDS deducted during a financial year exceeds the taxpayer’s actual tax liability. This often happens when the taxpayer’s income falls under a lower tax bracket, certain deductions or exemptions were not considered at the time of deduction, or income from multiple sources led to higher cumulative TDS. In such cases, the excess amount becomes refundable. The Income Tax Department issues the refund once the taxpayer files an Income Tax Return (ITR) for that financial year, declaring all incomes, deductions, and taxes paid.
When Can a Taxpayer Claim TDS Refund?
A taxpayer can claim a TDS refund when the total tax deducted exceeds the actual payable tax after adjusting all eligible deductions and exemptions. This scenario commonly arises in situations such as:
Employers deducting TDS without considering Section 80C or 80D deductions.
TDS deducted by banks on interest income even when the total income is below the basic exemption limit.
Individuals having multiple employers during the year, leading to higher overall TDS.
Senior citizens not liable to pay tax but facing TDS on fixed deposit interest.
Non-resident individuals whose final tax liability is lower than the tax deducted by Indian payers.
In each of these cases, the taxpayer can claim the excess tax as a refund by filing the ITR for the relevant financial year.
Step-by-Step Process to Claim TDS Refund
File Your Income Tax Return (ITR): Visit the official Income Tax e-filing portal and log in using your PAN credentials. Select the applicable ITR form based on your income sources—ITR-1 for salaried individuals, ITR-2 for those with multiple income heads, or ITR-3/4 for business professionals. Enter accurate income details, deductions under Chapter VI-A (like Sections 80C, 80D, and 80G), and TDS information as reflected in Form 26AS or the Annual Information Statement (AIS). The system will automatically compute your tax liability and determine any refund due.
Verify Your ITR: Once filed, verification is mandatory within 30 days. This can be done online using Aadhaar OTP, net banking, or Electronic Verification Code (EVC) generated via bank or Demat account. Alternatively, you can physically send a signed copy of ITR-V to CPC Bengaluru by post.
Refund Processing: After verification, the Centralized Processing Centre (CPC) processes the return, matches the data with TDS records, and calculates the refund. Typically, refunds are credited within 15–45 days of ITR verification directly to the taxpayer’s pre-validated bank account.
Check Refund Status: You can track your refund on the Income Tax e-filing portal under ‘My Account’ → ‘Refund/Demand Status’ or on the NSDL TIN website by entering your PAN and assessment year.
Filing and Verification of ITR for TDS Refund
Filing and verifying the return correctly is crucial to ensure timely refunds. While filing, taxpayers must double-check TDS details in Form 26AS and AIS to avoid mismatches. After submission, verification acts as the final confirmation for processing. The Income Tax Department does not process unverified returns. Hence, ensuring verification within 30 days of filing is essential.
The verification process can be completed through multiple options:
Aadhaar-based OTP sent to the registered mobile number.
Net banking verification using the taxpayer’s bank credentials.
EVC generated through a bank account or Demat account.
By sending a signed physical copy of ITR-V by post to CPC, Bengaluru.
Refund Processing Timeline and Tracking
Once the return is verified, the Income Tax Department begins refund processing. Generally, refunds are issued within 15–45 days of ITR verification. However, in cases involving complex income structures or scrutiny, it might take longer.
Taxpayers can check the refund status by:
Visiting the Income Tax e-filing portal and checking the ‘Refund/Demand Status’ tab.
Logging into the NSDL refund tracking portal and entering PAN and assessment year.
The refund amount, if approved, is directly credited to the bank account provided in the return. An intimation under Section 143(1) is also sent via email, specifying the refund amount and interest, if applicable.
Bank Account Requirements for Receiving TDS Refund
To ensure successful credit of the refund, taxpayers must provide an active and pre-validated bank account while filing their return. Key points include:
The account must be in the taxpayer’s name and linked with PAN.
The IFSC code and account number should be accurate.
PAN-Aadhaar linkage must be completed for processing.
New or recently closed accounts should be updated or removed from the e-filing profile to avoid failures.
The e-filing portal provides an option to validate or update bank account details under the ‘Profile’ section. Refunds will only be credited to accounts that are both validated and nominated for refund purposes.
Common Reasons for TDS Refund Delays
Refunds can be delayed due to several reasons, including:
Incomplete or incorrect bank account details in the ITR.
Mismatch between Form 26AS/AIS and the details entered in the return.
Unverified ITR within the 30-day period.
PAN not linked with Aadhaar.
Technical errors in the bank’s ECS system or closed accounts.
Returns selected for detailed scrutiny or verification by the assessing officer.
To avoid such delays, ensure all details are accurate before submission and check your Form 26AS regularly.
How to Update or Correct Bank Account Details for Refund Credit
If a refund fails due to incorrect or inactive bank details, taxpayers can easily update or correct their bank information on the e-filing portal. Here’s how:
Log in to the e-filing portal using your PAN.
Go to ‘Profile’ → ‘My Bank Account.’
Click ‘Add Bank Account’ and enter updated account details with IFSC.
Validate the account through OTP verification.
Once approved, mark it as the ‘Primary Account for Refund.’
If a refund fails, reissue requests can also be initiated through the same portal after updating the correct details.
Interest on Delayed TDS Refunds under Section 244A
Under Section 244A of the Income Tax Act, taxpayers are entitled to interest on delayed refunds at the rate of 6% per annum. This interest is calculated from the date of filing the ITR to the date the refund is credited to the bank account, provided the delay is not due to any fault of the taxpayer.
If the refund amount exceeds 10% of the total tax paid, the interest is automatically added by the department while issuing the refund. However, if the delay is due to pending verification, incorrect bank details, or mismatched data, interest may not be payable. The refund intimation (under Section 143(1)) clearly states the refund amount and the interest component, if applicable.
How TaxBuddy Simplifies the TDS Refund Process
TaxBuddy provides a convenient and efficient solution for claiming TDS refunds. Its AI-driven platform automatically fetches data from Form 26AS, AIS, and Form 16, minimizing manual errors. The system ensures that deductions, exemptions, and TDS entries are accurately mapped to prevent mismatches.
Through the TaxBuddy mobile app, taxpayers can file returns, verify them, and track refund status in real-time. The expert-assisted plans also help individuals with complex cases like multiple TDS entries, foreign income, or refund reissue requests. The platform’s automation and expert support make the entire refund process faster, simpler, and error-free.
Conclusion
Claiming a TDS refund for excess tax deducted is straightforward when returns are filed correctly and verified on time. Ensuring accuracy in income details, TDS entries, and bank information prevents unnecessary delays. The Income Tax Department processes refunds efficiently for verified returns, and interest under Section 244A compensates for any delays.
Using AI-based platforms like TaxBuddy can further simplify this process by automating data collection and ensuring accurate compliance. For anyone looking for assistance in tax filing, it is advisable to download theTaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? TaxBuddy offers both self-filing and expert-assisted ITR filing options, catering to different types of taxpayers. The self-filing option is designed for individuals comfortable with filing their own returns using an AI-driven platform that auto-fills data from PAN, Form 16, and Form 26AS. It includes real-time error checks and smart tax-saving suggestions. The expert-assisted plan, on the other hand, connects users directly with certified tax professionals who review, prepare, and file the ITR on their behalf. This option is ideal for those with complex income structures like capital gains, multiple employers, or foreign income, ensuring accuracy and compliance with the latest tax laws.
Q2. Which is the best site to file ITR? The best site to file an Income Tax Return depends on the taxpayer’s comfort, complexity of income, and need for assistance. The Income Tax Department’s official portal (incometax.gov.in) is the statutory platform for e-filing. However, for a smoother experience with guided support and automated tools, platforms like TaxBuddy stand out. TaxBuddy simplifies the filing process by pre-filling income data, validating tax credits from Form 26AS, and ensuring error-free calculations. Its AI-driven interface and expert review options make it a reliable alternative for those seeking accuracy, convenience, and faster processing.
Q3. Where to file an income tax return? An Income Tax Return (ITR) can be filed through two main channels—either the government’s official e-filing portal or through private, compliant platforms like TaxBuddy. On the official portal, taxpayers must manually upload details, verify documents, and cross-check deductions. TaxBuddy, however, integrates automation and expert guidance, allowing users to file directly via its mobile app or website. It pulls data from PAN, Form 16, and Form 26AS automatically, saving time and reducing errors. This makes it suitable for both salaried individuals and professionals seeking a seamless, error-free tax filing experience.
Q4. Who is eligible to claim TDS refund? Any taxpayer who has paid excess tax through TDS is eligible to claim a refund. This includes salaried employees, freelancers, NRIs, pensioners, and companies. A refund arises when the total TDS deducted by employers, banks, or other entities exceeds the actual tax payable after considering deductions, exemptions, and final income computation. For example, if an individual’s employer deducted TDS without factoring in investments under Section 80C or medical insurance under Section 80D, the taxpayer becomes eligible for a refund of the excess tax.
Q5. Is filing ITR mandatory to claim TDS refund? Yes, filing an Income Tax Return (ITR) is mandatory to claim any TDS refund. The Income Tax Department does not issue refunds automatically, even if excess TDS is deducted. The taxpayer must file the ITR for the relevant financial year, declare income and deductions accurately, and ensure all TDS entries match those reflected in Form 26AS or AIS. Once the ITR is filed and verified within 30 days, the refund is processed and credited to the registered bank account. Failure to file an ITR means forfeiting the refund claim for that year.
Q6. How can TDS and refund status be checked? Taxpayers can track their refund status using two reliable methods. The first is through the Income Tax e-filing portal by logging in, navigating to ‘My Account,’ and selecting ‘Refund/Demand Status.’ The second method is via the NSDL (now Protean) refund tracking website, where users simply enter their PAN and assessment year. Both portals display the current refund status, mode of payment, and any failure reasons, such as incorrect bank details. TaxBuddy users can check their refund status directly within the app, where the system syncs refund updates from the department’s database automatically.
Q7. What if the ITR filing deadline is missed? If the ITR filing deadline is missed, a taxpayer can still file a belated return before the end of the assessment year. However, this may attract penalties and delay refund processing. For example, for the financial year 2024–25, the due date is September 15, 2025, and a belated return can be filed up to March 31, 2026. The belated filing may also lead to loss of certain benefits, such as the ability to carry forward capital losses. Hence, filing within the due date ensures quicker refund credit and compliance with tax regulations.
Q8. How long does it take to receive the TDS refund? Typically, a TDS refund is credited within 15 to 45 days after ITR verification. The timeline depends on factors like accuracy of the return, volume of processing at the Income Tax Department, and the taxpayer’s refund amount. If discrepancies arise—such as mismatched details in Form 26AS or incorrect bank information—the process may take longer. The refund is issued directly to the taxpayer’s pre-validated bank account, and an intimation under Section 143(1) is sent once the refund is approved. TaxBuddy’s app helps track refund progress and alerts users when the refund is credited.
Q9. What happens if incorrect bank details are provided? If incorrect or inactive bank details are entered in the ITR, the refund will fail to credit. In such cases, the taxpayer receives a “refund failure” intimation from the CPC (Centralized Processing Centre). The issue can be resolved by logging into the e-filing portal, updating the correct bank account information under ‘Profile → My Bank Account,’ and validating it through OTP or EVC verification. Once validated, the taxpayer can raise a ‘refund reissue request’ under the ‘Service Requests’ section. Using accurate and pre-validated bank details ensures smooth refund credit without interruptions.
Q10. Is interest paid on delayed refunds? Yes, the Income Tax Department pays interest on delayed refunds under Section 244A of the Income Tax Act. If the refund is not issued within a reasonable period after ITR verification, taxpayers are entitled to an annual interest of 6% on the refundable amount. The interest is calculated from the date of filing the return to the date of refund credit, provided the delay is not due to any fault of the taxpayer. The intimation order under Section 143(1) specifies both the refund and the interest amount separately.
Q11. Can a TDS refund be credited to a joint bank account? Yes, a TDS refund can be credited to a joint bank account as long as the taxpayer’s PAN is linked with that account and it has been successfully pre-validated on the e-filing portal. However, using a primary account solely in the taxpayer’s name is recommended for faster verification and reduced chances of refund failure. If the joint account does not meet PAN validation requirements, the refund may not be processed. Hence, taxpayers should verify their preferred account well in advance while filing their return.
Q12. How does TaxBuddy help ensure faster refunds? TaxBuddy simplifies and accelerates the refund process through automation and expert guidance. Its platform automatically imports data from Form 26AS, AIS, and Form 16, ensuring that all TDS entries are accurate and complete. The system instantly identifies any mismatches, missing deductions, or errors that could delay refunds. Additionally, TaxBuddy’s experts review returns before submission, ensuring compliance with the latest tax provisions. Once filed, the app tracks refund status in real-time and notifies users of updates. This end-to-end support—from filing to refund credit—ensures maximum accuracy and faster processing.
