TDS refund — how to claim it in your ITR
A TDS refund arises when tax deducted at source (by an employer, bank, or client) exceeds your actual tax liability for the year — common for those with multiple income sources, investment declarations submitted late to an employer, or TDS deducted on fixed deposit interest despite falling below the taxable threshold overall. The refund is claimed by filing an ITR that reconciles TDS shown in Form 26AS/AIS against your computed liability.
Common reasons for a TDS refund
Frequent scenarios include: an employer deducting TDS based on the old regime before you could submit investment proofs for 80C/80D deductions, banks deducting TDS at a flat rate on fixed deposit interest even when your total income is within the exemption limit, and freelancers having TDS deducted by clients under Section 194J even though their overall tax liability (after presumptive taxation) is lower.
How the refund is computed and claimed
When filing your ITR, the portal computes your actual tax liability based on total income and deductions, then nets it against total TDS/TCS credit reflected in Form 26AS and AIS. If TDS exceeds the computed liability, the excess is claimed as a refund in the return itself — there's no separate refund application process.
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Talk to a CA →Providing correct bank details for refund credit
Refunds are credited directly to a pre-validated bank account linked to your PAN on the income tax portal. An account that isn't pre-validated, or bank details that don't match your PAN records, are among the most common reasons a computed refund gets stuck or delayed even after the return is processed.
Interest on delayed refunds
If the department takes longer than expected to process and issue your refund, you're generally entitled to interest under Section 244A, computed from the start of the assessment year (for returns filed by the due date) until the refund is issued. This interest is itself taxable income in the year received.
Why a refund claim can trigger closer scrutiny
A return claiming a large refund relative to reported income, or claiming TDS credit not matching Form 26AS/AIS, is statistically more likely to be picked up for a preliminary check or a Section 143(1) intimation with adjustments. Reconciling your TDS claim carefully against Form 26AS before filing reduces the chance of processing delays.
Why is my expected TDS refund taking so long to arrive?
The most common causes are: your bank account isn't pre-validated on the income tax portal, a mismatch between the bank account details on file and your PAN records, your return is still under processing (which can take longer if TDS claimed doesn't perfectly match Form 26AS/AIS), or your return was selected for a more detailed scrutiny check. Pre-validating your bank account before filing, and ensuring your TDS claim exactly matches Form 26AS, are the two most effective ways to avoid delay.
This article is for general information only. For your specific situation, consult a practicing CA.
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