Each year, many salaried individuals, freelancers, small business owners, and even senior citizens receive an income tax refund after filing their ITR. This refund is primarily due to excess TDS (Tax Deducted at Source) being collected by banks, employers, or clients during the year. If your actual tax liability is lower than the TDS deducted, you’re eligible for a refund.
But who gets this refund, when, and through which ITR form should you claim it? This blog breaks down everything you need to know about TDS refunds, ITR types, and the refund process.
1. What Is a TDS Refund?
TDS is the amount of tax deducted by the person or organization paying you income (e.g., employer, bank, client). This deduction is deposited with the Income Tax Department against your PAN if the amount being given to you exceeds a certain limit. It can be for different types of payment made to you like professional income, contractual income interest income etc
However, if your total TDS exceeds your total tax liability for the year, you can claim the excess amount as a refund by filing your ITR.
2. Who Can Claim TDS Refunds?
Anyone who has paid excess tax during the financial year—either through TDS, TCS, Advance Tax, or Self-Assessment Tax—and whose total liability is lower than the taxes paid can claim a refund.
Common Examples:
- Salaried individuals
- Freelancers and consultants whose clients deducted TDS @ 10% or @ 2% but actual income tax liability was lower due to deductions or lower slabs.
- Senior citizens earning interest income, where banks deducted 10% TDS despite income being below the basic exemption limit.
- NRIs earning from Indian bank deposits with TDS @ 30% but actual taxable income below that.
Investors paying TDS on dividends or mutual fund redemptions but having capital loss carryforwards or low taxable income.
3. Types of ITR Forms and Refund Eligibility
Here’s a simplified view of which ITR forms are used to claim TDS refunds based on the taxpayer type:
ITR Form | Applicable To | Refund Eligible? |
ITR-1 | Salaried individuals, pensioners, interest income | ✅ Yes |
ITR-2 | Individuals with capital gains, foreign income/assets | ✅ Yes |
ITR-3 | Professionals, freelancers, business income (non-presumptive) | ✅ Yes |
ITR-4 | Individuals under presumptive taxation (Section 44ADA/44AE) | ✅ Yes |
ITR-5/6 | Firms, LLPs, Companies | ✅ Yes |
No matter which form applies, refunds are auto-calculated when you file your ITR and will be credited to your bank account (provided it’s pre-validated on the income tax portal).
4. Common Situations Where Refund Arises
✅ Salaried Person With 80C/80D/80G Claims Not Declared to Employer
If you forgot to submit proof of LIC premium, PPF, medical insurance, or donations to your HR, extra TDS may be deducted. You can claim it while filing ITR and get a refund.
✅ Freelancer Earning Less Than Tax Slab but Client Deducts TDS
Clients deduct 10% or 2% TDS even if your income is ₹3–4 lakh/year (below exemption limit). In such cases, you can claim a full refund of the TDS amount.
✅ Senior Citizens Not Filing Form 15H
If a bank deducts 10% TDS on FD interest for a senior citizen earning below ₹3 lakh (or ₹5 lakh for very senior citizens), a refund is due unless Form 15H was filed.
✅ Investors With Capital Losses or Carry forwards
If mutual fund redemptions attract TDS, but you have capital losses carried forward or your total gain is exempt (under ₹1 lakh LTCG), you can claim a refund.
✅ Excess Advance Tax or Self-Assessment Tax Paid
Sometimes, taxpayers estimate and pay higher advance tax or self-assessment tax before filing. If final computation shows overpayment, refund can be claimed.
5. How to Claim the Refund
✅ Step-by-Step:
- File your Income Tax Return correctly using the appropriate form.
- Mention all TDS details in Schedule TDS/TCS or Tax Paid.
- Enter your pre-validated bank account for receiving refund.
- Submit and e-verify the ITR (using Aadhaar OTP, net banking, etc.).
- Refund will be processed by CPC, Bangalore, and credited usually in 15–45 days, unless your ITR is under scrutiny.
Note: TAX VIC HELP YOU FILE ITR AND CLAIM YOUR INCOME TAX REFUND LEGALLY.
6. How to Track Your Refund
- Login to Income Tax Portal → Go to “View Filed Returns”
- You’ll see the status like: “Processed with Refund”, “Refund Issued”, or “Under Processing”
7. FAQs About TDS Refund
Q: Is interest paid on income tax refund?
✅ Yes, if refund is delayed beyond 90 days from ITR processing, interest u/s 244A is paid.
Q: What if refund is not credited?
✅ Check if your bank account is pre-validated. If not, update and reprocess refund through “Refund Reissue Request”.
Q: Can I revise my return if I missed refund details?
✅ Yes, you can file a revised return before the due date (typically 31st Dec of AY).
Final Thoughts
A large number of taxpayers, especially first-time freelancers, salaried individuals, and senior citizens, often miss claiming legitimate refunds. The key is:
- Match Form 26AS and AIS with actual income
- Ensure all deductions and exemptions are claimed
- File ITR using the right form and validate your bank account
💡 Smart Tip: Even if your income is below taxable limits, you should file ITR if TDS has been deducted—you’ll get that money back!
