How to Claim Your TDS Refund
Your friend unexpectedly returning the money you’d lent them can
be a major windfall. Everyone loves finding money in their pockets when they
least expect it and need it the most. But your TDS refund is something you can
look forward to finding in your account if you claim it right.
It is the
tax filing season and most people are dealing with a concept known as TDS or
Tax Deducted at Source. While most assessees have TDS on their income, not
everyone claims their refund.
What is TDS?
TDS, or Tax
Deducted at Source, is tax which is deducted from the income at the time of
earning the income. The entity which makes the payment to the individual
deducts tax as per the applicable rate and makes the remaining payment to the
individual. The deductor is supposed to remit the amount deducted to the
Government immediately or at a quarterly basis.
Who can
deduct TDS?
The term TDS
is most commonly used in the parlance of an employer – employee relationship.
The employer, while paying salary to the employee on a monthly basis, deducts
TDS based on the income tax rate applicable to the employee. The TDS on all
payments needs to be deducted at specified rates, unless otherwise exempted.
Payment of
interest on investments, payments to contractors, fees for professional or
technical services, payment of rent, payment of compensation on acquisition of
immovable property, etc., are some other cases where tax is deducted at source.
The remaining amount is remitted to the individual.
What are
Form 16 and Form 16A?
When TDS is
deducted, the entity deducting the tax issues a certificate indicating the
amount of tax deducted and remitted to the Government. Form 16 is issued by the
employer to the employee and this indicates the income earned by the employee,
the tax deducted by the employer and the details of tax remitted by the
employer.
Form 16A on
the other hand is issued by other deductors on TDS on all payments other than
salary. This also signifies the amount of payment made, amount of tax deducted
and the TDS payment made to the Government. Form 16A is issued on a quarterly
basis, unlike Form 16 which is issued on an annual basis.
When can you
claim a TDS refund?
When the
amount you are supposed to pay as tax in a year is lower than the amount
already deducted as TDS, you are eligible to claim a TDS refund.
For example,
Raj is an independent contractor. Let us assume the total tax to be paid by Raj
in the previous year, based on all his earnings, is Rs. 40,000. A total of Rs.
50,000 was deducted as TDS by all his contractees on Raj’s account and remitted
to the Government. In this case, Raj can claim Rs. 10,000 as TDS refund.
Another
instance when you can claim a TDS refund is when you fall below the minimum
taxable limit and yet TDS has been deducted. For example, Sheela offered
consulting services to her clients and Rs. 20,000 was deducted at source by the
clients. However, Sheela’s total income for the year was only Rs. 1.5 lakhs. In
this case, she can claim TDS refund of Rs. 20,000.
How to claim
TDS refund:
There is no
specific refund process or form to claim TDS refunds. You must file your income
tax returns in the normal manner. The excess of TDS over what you are supposed
to pay as tax in the year will be the refund amount due, and this needs to be
shown in the returns filed. The TDS refund is processed by the Income Tax
department within a few months of filing returns. Usually, it takes about 6
months time.
The Income
Tax department processes the refund amount along with an interest of 6% per
annum in some cases. The refund is usually given in the form of a cheque.
However, with effect from AY 2015-16, all refunds will be made in electronic
form, directly to the bank account of the assessee, which is required to be
mentioned while filing the returns.
What to do
if you don’t receive your TDS refund?
The TDS refund is usually automatically processed and credited,
if everything is in order. However, if you don’t get your refund despite filing
for it, you must first check the status of the refund, which is possible by
mentioning your PAN number and the assessment year in the efiling website of
the Income Tax department.
A delay in
refund is possible if you have physically filed the returns or if you have efiled the
returns but not sent the ITR-V on time. In this case, you will need to wait.
Sometimes, the address or the bank account mentioned is incorrect. In this
case, you should contact your Assessing Officer and inform them of the change.
The
Assessing Officer will in turn inform the concerned bank regarding the
remittance, and you can track it accordingly. In some cases, the IT department
finds an error in your calculations and may find that you are not eligible for
the refund. In this case, you can contact the Assessing Officer and get the
required clarification.
In all the
above cases, it is important to first ascertain the cause of not getting the
refund before taking the appropriate steps.
After all,
if you’re friend treats you to a good dinner, all is well. Isn’t it?
No comments:
Post a Comment