TDS Refund
TDS Refund is the return of excess tax deducted at source by the deductor and paid to the government. It occurs when the actual tax liability is less than the TDS deducted.
When It Happens
Refund arises due to higher TDS deduction, incorrect estimation of income, or eligible deductions/exemptions not considered by the employer.Claim Process
To claim a refund, the individual must file an income tax return (ITR). The system calculates the refund automatically after adjusting the total tax liability.
- Bank Account Pre-validation:
The refund is credited directly to the taxpayer’s bank account, which must be pre-validated and linked with PAN on the income tax portal. - Refund Timeline:
If the return is filed accurately and on time, refunds are typically processed within 20–45 days after e-verification. - Interest on Refund (Section 244A):
The Income Tax Department pays interest (usually at 6% p.a.) on the refund amount if there is a delay in processing beyond a specified period. - Accounting Entry for Refund:
Credit: TDS Receivable (or Income Tax Refund A/c)
- Tracking Refund Status:
Refund status can be tracked online via the income tax portal or the NSDL website using PAN and acknowledgment number.
