Have you ever felt confused when your employer or bank deducts more tax than required, and you are unsure how to get it back? Many taxpayers face this situation every year when the deducted TDS ends up being higher than their actual tax liability.
The good news is that you can claim the extra amount as a refund, but only if you file your Income Tax Return correctly and on time. Understanding the process is important because it ensures your money is credited back to your account without unnecessary delays.
In this guide, we will walk you through everything you need to know about claiming TDS refunds in India, including the step-by-step process, refund timelines, and cryptocurrency-specific TDS rules.
What is a TDS Refund
A TDS refund arises when the total tax deducted at source during the year is higher than your actual tax liability. In simple words, if the government has collected more than what you owe, the extra amount is eligible to be returned to you.
The only way to claim this refund is by filing your Income Tax Return. When you file, you add up your income, apply all deductions, and then compare the total tax liability with the TDS already deducted. If the deducted amount is greater, the difference will be refunded.
For example, if your employer deducts more tax from your salary because you forgot to submit proof of deductions, the additional TDS will be refunded once you file your return with the correct details.
Common Scenarios Where TDS Is Deducted
There are several situations where the amount of TDS deducted may be higher than the tax you actually owe. Knowing these cases helps you understand when you can request a refund while filing your Income Tax Return.
Excess TDS Deducted from Salary
If you forget to share investment proofs or give incorrect declarations, your employer may deduct more tax from your salary. When you later calculate your actual liability, you may find that the TDS deducted is more than required. In such cases, you are eligible to claim a refund by filing your return.
TDS on Fixed Deposits
Banks often deduct TDS on interest income even if your earnings are below the basic exemption limit. If you have submitted Form 15G but the bank still deducts tax, you can file your return and request a refund of the excess deduction.
Senior Citizens with FD Accounts
Senior citizens are allowed an exemption on interest income up to INR 50,000 under Section 80TTB. They can also submit Form 15H if their overall income is below the taxable limit. If TDS is still deducted by the bank, the refund can be claimed when filing their return.
TDS on Cryptocurrencies
The government has introduced a rule under Section 194S of the Income Tax Act that requires 1% TDS on cryptocurrency trades. This applies to both buyers and sellers whenever a trade is made on exchanges.
If more TDS is deducted than your final tax liability, you can claim a refund by filing your Income Tax Return. For example, if your total income falls below the taxable limit but trades have already attracted TDS, you are eligible for a refund.
In certain cases, if a seller’s Permanent Account Number (PAN) is not available, the deduction may be as high as 20% under Section 206AA. Even then, the excess TDS can be claimed back while filing your return.
Other Situations
Refunds may also arise in cases, such as TDS on professional fees, rent, or other forms of income, where deductions are higher than the actual liability. By carefully checking your Form 26AS and matching it with your final tax calculation, you can claim the excess as a refund.
How to Claim TDS Refund Online?
The online process to claim a TDS refund is simple, but it must be followed carefully to avoid delays. By registering on the official income tax portal and filing your return electronically, you can ensure that the refund is processed smoothly.
Register on the Income Tax Portal
Before filing, you must create an account on the official income tax e-filing portal. Registration requires your PAN, mobile number, and email ID. Once registered, you can access all income tax services, including ITR filing and refund status checks.
Filing the Appropriate ITR Form
After registration, the next step is downloading and filling out the correct ITR form based on your income type.
Important Points:
- Choose the right form that applies to your income sources.
- Enter details of your income, deductions, and TDS as per Form 26AS.
- Double-check that all figures are accurate to avoid mismatches.
Submitting and Uploading the ITR
Once the form is completed, you can upload and submit it online. After submission, an acknowledgement will be generated.
Things to Do After Uploading:
- Download the ITR acknowledgement copy.
- Keep a record for future reference.
- Track the progress through the e-filing portal.
Completing the E-Verification Process
The refund process begins only after the ITR is verified. You can choose any of the following options:
- Aadhaar OTP verification
- Net banking verification through eligible banks
- Digital signature authentication
- Sending a physically signed copy of ITR-V to CPC, Bengaluru, if e-verification is not possible.
Refund Processing Timeline
The time taken to receive a TDS refund depends on when and how your Income Tax Return is filed and verified. Once your return is successfully processed, the refund is transferred directly to your pre-validated bank account.
Usual Duration for Processing
In most cases, refunds are credited within 1 to 6 months. However, the period may vary depending on the accuracy of details provided and the volume of returns being processed by the department.
Faster Processing with E-Verification
If you complete e-verification promptly, the refund is often processed more quickly. Nowadays, many taxpayers receive refunds within 30 days of ITR processing, provided there are no discrepancies or mismatched details.
Interest on TDS Refund
If your TDS refund is delayed, the Income Tax Department pays you additional compensation in the form of interest. This ensures that taxpayers are not financially disadvantaged due to the late processing of refunds.
Section 244A Provision
Under Section 244A of the Income Tax Act, you are entitled to simple interest at the rate of 6% per year on the refund amount. The interest is calculated monthly and starts from the beginning of the assessment year, provided the return was filed within the due date.
Conditions for Interest Payment
- Interest is paid only if the refund amount is more than 10% of your total tax liability.
- Any interest earned on refunds is considered taxable under Income from Other Sources.
- The interest continues until the date the refund is credited to your account.
How to Check TDS Refund Status?
After filing your return, it is important to track the progress of your refund request. The Income Tax Department provides multiple ways to check the status, ensuring that taxpayers stay informed about whether the refund is approved, pending, or requires correction.
Checking Through the E-Filing Portal
The easiest method is by logging into the income tax e-filing portal. Once signed in, you can view the progress of your return and refund.
Steps to follow:
- Log in using your PAN, password, and captcha.
- Go to E-file >> Income Tax Returns >> View Filed Returns.
- Choose the relevant assessment year and click on View Details.
- Select the refund status link to view current progress.
Tracking via Refund Banker
Refunds are processed through a designated refund banker, and you can track them using reference numbers or alerts.
Tracking Options:
- Use the refund reference number on the portal.
- Receive updates on your registered email ID.
- Get SMS notifications on your registered mobile number.
What Happens After Filing a Refund Claim?
Once you file your Income Tax Return and request a refund, the Income Tax Department begins the process of reviewing your claim. This ensures that the amount deducted and declared by you matches their records before any refund is issued.
Processing Under Section 143(1)
The first step after filing is processing your return under Section 143(1). The department checks the details you submitted against the information in their database, including income sources, deductions, and TDS records.
Key Points During Processing:
- Verification of the income declared by the taxpayer
- Cross-checking deductions and exemptions claimed
- Matching TDS with Form 26AS and AIS
- Identifying discrepancies, if any, for adjustment
Refund Adjustment Against Previous Year’s Demand
Sometimes the refund you expect may not be fully credited because it is adjusted against tax demand from an earlier year.
What You Should Do?
- Review the outstanding demand on the e-filing portal.
- Cross-check whether the demand is valid or raised in error.
- If incorrect, file a rectification request with the necessary documents.
Different Refund Status Outcomes and Their Meaning
While checking, you may come across different refund statuses. Each has a specific meaning and requires different actions.
Refund Status | Meaning | Action to be Taken |
Refund paid | The refund has been credited successfully to your bank account. | Confirm the credit in your pre-validated bank account. |
Refund unpaid | The refund could not be credited due to incorrect bank details. | Update details on the portal and raise a refund reissue request. |
No demand, no refund | You neither owe taxes nor are you eligible for a refund. | Cross-check your ITR summary to ensure figures are accurate. |
Demand determined | Additional tax payable as per assessment under Section 143(1). | Pay the outstanding demand or file a rectification if there is an error. |
Rectification processed | Your correction request has been processed with updated results. | Check whether it resulted in refund, demand, or no change, and act accordingly. |
Refund Reissue in Case of Failure
Sometimes, even after a refund has been approved, it may fail to get credited to your account. This usually happens due to incorrect bank details or account mismatches. In such situations, the Income Tax Department allows you to raise a refund reissue request on the portal.
Common Reasons for Refund Failure
Refund failure may occur for several reasons. Understanding them helps you avoid delays.
Possible Issues:
- Bank account not pre-validated on the portal
- Incorrect or invalid IFSC code
- Closed or inactive bank account
- Mismatch between PAN details and the bank account holder’s name
Steps to Raise a Refund Reissue Request
If your refund has failed, you can submit a reissue request on the income tax portal.
Process to follow:
- Log in to the income tax e-filing portal
- Go to Services >> Refund Reissue
- Select the record for which you need a reissue
- Choose the correct pre-validated bank account
- Verify and submit the request with e-verification.
Also Read: How To File Revised Return?- Section 139(5)
How KoinX Helps with TDS Tracking on Crypto Transactions?
For cryptocurrency investors, keeping track of TDS can be complicated because trades often happen across multiple exchanges. Manually reconciling these deductions with your income tax records can be time-consuming and error-prone. KoinX simplifies this process by automatically calculating and tracking TDS across all your crypto transactions. It ensures that you never lose sight of what has been deducted and helps you file accurate reports while claiming refunds for excess deductions.
Automated TDS Tracking
KoinX connects with 800+ centralised and decentralised exchanges to monitor every crypto transaction. The platform automatically calculates the 1% TDS under Section 194S and records it in real time, saving you from manual tracking.
ITD-Compliant Tax Reports
The platform generates tax reports that are fully compliant with the Income Tax Department’s requirements. These reports reflect TDS deducted across your trades and can be directly matched with Form 26AS or AIS to ensure accuracy when filing returns.
Simplified Refund Claims
By keeping all TDS records updated, KoinX makes it easier to claim refunds if excess TDS is deducted. The detailed reports highlight the total tax deducted, enabling you to cross-check with your final liability and file an error-free ITR.
Free Portfolio Tracker
Apart from tax reporting, KoinX also offers a free portfolio tracker. This tool helps you view your overall crypto holdings, profits, and TDS deductions in one place, making the tax filing and refund process much more transparent.
Start using KoinX today to simplify your crypto tax filing and claim your TDS refunds with confidence.
Conclusion
Claiming a TDS refund is an essential step to ensure that the tax deducted from your income is adjusted fairly. By filing your Income Tax Return on time, providing accurate details, and keeping track of refund status, you can recover any excess tax without complications.
If you are trading cryptocurrencies, tools like KoinX make it easier to track deductions, reconcile them with official reports, and file accurate returns. Start using KoinX today to simplify your tax compliance and claim your TDS refunds seamlessly.
Frequently Asked Questions
Can I Claim A TDS Refund Without Linking My PAN To The Bank Account?
No, you cannot. Your refund will only be credited to a pre-validated bank account that is linked to your PAN. Without this, the refund process may fail, and you will be required to update your details and raise a reissue request through the income tax portal.
Is There A Deadline For Claiming TDS Refunds In India?
Yes, you must file your Income Tax Return within the prescribed due dates to claim a refund. If you miss the deadline, the Income Tax Department will not process any excess TDS refunds. Timely filing ensures your claim is considered and processed without unnecessary complications.
Can I Change My Bank Account After Submitting A Refund Claim?
Yes, if the refund has failed or if you want it credited to a different account, you can raise a refund reissue request. You will need to ensure that the new account is pre-validated on the portal and linked with your PAN before submitting the request.
Does Claiming A TDS Refund Trigger A Tax Audit?
No, claiming a TDS refund does not automatically trigger a tax audit. The Income Tax Department processes your return under Section 143(1) and verifies your claim against their records. An audit will only be initiated if there are major discrepancies or unusual reporting in your filed return.
Can I Check My TDS Refund Status Without Logging Into The Portal?
Yes, you can track your refund through SMS or email alerts sent by the refund banker. The status is shared on your registered mobile number and email ID. However, for detailed information, including refund amounts and adjustments, logging into the e-filing portal is the recommended method.
Is The Interest On TDS Refund Credited Separately?
No, the interest payable under Section 244A is credited along with the refund amount into your bank account. The consolidated credit includes both the principal refund and any applicable interest. Remember, the interest portion is taxable and must be reported under Income from Other Sources on your return.
