When Excess TDS is deducted

In our last post we looked at what is TDS and how all TDS is linked to your PAN account.

There may be situations when your company deducts excess TDS on your salary – when you fail to submit your 80C investment proofs on time or when rent receipts were not submitted by you to save tax on HRA. Or as a freelancer TDS has been deducted at a higher rate whereas you realize you fall in a lower bracket when you round up the year. Excess TDS may have been deducted from you income.

Let’s see what happens when excess TDS has been deducted from your Income?

Your employer or person paying you the money – has already deducted the tax (which was excess) and deposited it with the government. You cannot claim this from the deductor. To claim any excess TDS deducted filing your return is mandatory. You can use Form 26AS to view the detail of all the TDS which has been deducted under your PAN. Also, the deductor is liable to provide you with a certificate that states details of tax deducted by the deductor and deposited to the government.

Prepare your IT return and add all your income under various heads (gross value). From the final tax liability subtract the TDS which has already been deducted from your income. If the total TDS deducted is higher than your final tax liability a refund will be due from the government. When you file with clearTax, you only input the relevant details of income and TDS and we calculate your refund or net tax liability – you don’t have to worry about any calculations.

Beginning the current year, the IT department will process refunds only through ECS. Hopefully, this way the refunds will be much quicker. If for some reason there is a delay in your refund, you should receive interest @ 6% on the refund amount provided refund amount is more than 10% of the tax payable during the year.

To avoid excess TDS deduction – always plan your taxes in advance. If required obtain a certificate from your Assessing Officer for lower tax deduction. For lower or no TDS on interest payment from banks provide Form 15G and 15H to the bank, as applicable. Plan your tax wisely – and invest in 80C deductions timely.

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