How to Get Refund of TDS Deducted by Bank

Tax Deducted at Source (TDS) is a mechanism introduced by the Income Tax Department of India to collect tax at the source of income generation. Banks often deduct TDS on interest earned from fixed deposits, savings accounts, and other similar investments. While TDS ensures timely tax collection, there are instances where taxpayers may be eligible for a refund of the TDS deducted by the bank. This guide provides a detailed overview of how to get a refund of TDS deducted by the bank, including the necessary steps, documentation, and frequently asked questions (FAQs).

TDS stands for Tax Deducted at Source. It is a method where tax is deducted at the time the income is generated rather than at a later date. This system helps in the timely collection of taxes and reduces the burden of lump-sum tax payments at the end of the financial year.

Banks are required to deduct TDS on interest income exceeding ₹40,000 per annum (₹50,000 for senior citizens) from fixed deposits, recurring deposits, and other interest-bearing accounts. The current rate of TDS on interest income is 10% if the Permanent Account Number (PAN) is provided; otherwise, it is 20%.

• Income Below Taxable Limit: If your total income is below the taxable limit.
• Excess TDS Deducted: If the bank has deducted more TDS than required.
• Tax Benefits and Deductions: If after considering all eligible deductions and exemptions, your tax liability is less than the TDS deducted.

Form 16A is a TDS certificate issued by the bank that provides details of the TDS deducted and deposited with the government. Ensure you collect this form for each financial year you seek a refund for.

Add up all your sources of income, including salary, interest from deposits, rental income, and any other income. Then, calculate your total income for the financial year.

Using the current income tax slabs and rates, compute your total tax liability. Make sure to include all eligible deductions under sections like 80C, 80D, 80TTA, etc.

Cross-verify the TDS details in Form 26AS with the Form 16A provided by the bank. Form 26AS is a consolidated tax statement that shows all the TDS deducted and deposited against your PAN.

1. Choose the Right ITR Form: Depending on your income sources, select the appropriate ITR form. For instance, ITR-1 (Sahaj) is for individuals with income from salary, one house property, and other sources (excluding lottery winnings and income from racehorses).
2. Fill in the Details: Enter your personal details, income details, and TDS details in the ITR form.
3. Claim Deductions: Enter details of all eligible deductions and exemptions.
4. Validate and Submit: Validate the information and submit the ITR. E-verify your return for faster processing.

After filing your ITR, you can monitor the status of your refund on the Income Tax Department’s e-filing portal. The status will be updated periodically.

• Form 16A: TDS certificate from the bank.
• Form 26AS: Consolidated tax statement from the Income Tax Department.
• PAN Card: Proof of identification.
• Bank Statements: Proof of interest income.
• Investment Proofs: For claiming deductions under various sections.
• Previous Year’s Tax Return: For reference and consistency.

1. Submit Form 15G/15H: If your total income is below the taxable limit, submit Form 15G (for non-seniors) or Form 15H (for seniors) to the bank to avoid TDS deduction.
2. Maintain Updated Records: Keep detailed and updated records of all your income sources and TDS certificates.
3. Timely Filing: File your income tax return on time to avoid delays in the refund process.
4. Double-Check Information: Ensure all details in Form 16A, Form 26AS, and your ITR are accurate and consistent.
5. Professional Help: Consider consulting a tax professional for accurate computation and filing if your financial situation is complex.

1. What is TDS and why is it deducted by banks?

TDS stands for Tax Deducted at Source. It is deducted by banks on interest income to ensure timely tax collection.

2. How can I avoid TDS deduction on my bank interest?

If your total income is below the taxable limit, you can submit Form 15G/15H to your bank to avoid TDS deduction.

3. What should I do if the bank deducts excess TDS?

If excess TDS is deducted, you can claim a refund by filing your income tax return and providing the necessary details.

4. How do I get Form 16A from my bank?

You can request Form 16A from your bank. Many banks also provide this form through their online banking portals.

5. How do I verify the TDS deducted by the bank?

You can verify the TDS details through Form 26AS, available on the Income Tax Department’s e-filing portal.

6. What is Form 26AS?

Form 26AS is a consolidated tax statement that shows all the TDS deducted and deposited against your PAN for a particular financial year.

7. How do I file my income tax return to claim a TDS refund?

You can file your income tax return online through the Income Tax Department’s e-filing portal. Enter all relevant details and submit the return.

8. How long does it take to get a TDS refund?

The processing time for a TDS refund can vary. Typically, it takes a few months after the ITR is processed.

9. Can I get a refund if I don’t have Form 16A?

While Form 16A helps in verifying TDS details, you can still file your return using the information available in Form 26AS.

10. What happens if I don’t file my income tax return on time?

If you don’t file your return on time, you may face penalties and delays in getting your TDS refund.

Claiming a refund of TDS deducted by the bank involves a systematic approach to ensure accuracy and compliance. By understanding the process, maintaining proper records, and timely filing your income tax return, you can efficiently get a refund of the TDS deducted. Always ensure that you cross-verify all the details and consult a tax professional if needed to avoid any discrepancies. This guide aims to provide a comprehensive understanding of the steps involved in getting a TDS refund, thereby making the process smoother and more manageable.