Taxpayers can claim excess Tax Deducted at Source (TDS) paid while filing an income tax return (ITR).
Taxpayers can claim excess tax deducted at source (TDS) paid while filing an income tax return (ITR). TDS, as we know, is the amount of tax that is deducted from a taxpayer’s income like salary, interest from bank accounts, rent, etc and deposited to the government's treasury.
If the TDS deposited is more than what taxpayers owe to the government, a TDS refund can be claimed while filing the income tax return.
Archit Gupta, Founder and CEO of ClearTax explains this with an example.
“For instance, a taxpayer has an FD and earn an interest income out of it. Banks levy a basic 10 percent TDS on the interest accumulated. Now, if the taxpayer belongs to the 5 percent tax bracket, he/she can claim a TDS refund for the additional amount deducted,” Gupta elaborates.
Similarly, the taxpayer can also claim a TDS refund of excess salary TDS deducted due to non-submission of 80C investment proofs or rent receipts towards house rent allowance or any other tax investments done but not submitted to the employer.
For FY 2019-20, the due date for tax saving investment was extended from March 31, 2020, to July 31, 2020, by the government. Hence if taxpayers have made any investment starting from April 1, 2020, to July 31, 2020, they can claim the deduction by mentioning these details in ‘Schedule DI’ of the ITR form.
"These investments would have not been considered for TDS by the employer, Hence the taxpayer should claim TDS refund on these extended date investments if any," Gupta said.
At the time of filing the income tax return, Gupta says that the taxpayer can sum up all the income from various sources, find out the tax liability, and subtract the TDS applied to the income.
If the TDS is higher than the total tax liability for the financial year, it means a refund is due from the government.
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