KNOWLEDGE CENTRE Tax Planning / How to Get Refund if Your Employer Deducts TDS
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How to Get Refund if Your Employer Deducts TDS


How to claim tax refund?

You file your income tax return (ITR) every year. However, like most taxpayers, you may be unaware of how to claim a refund and how the procedure works. If you have paid the government more than your tax liability, you are eligible to claim a refund.

A higher tax payout usually occurs because of self-assessment tax, advance tax, and Tax Deducted at Source (TDS) when the liability is less than the deducted amount.

How to claim tax refund?

The reply to your question of how to claim a tax refund is very simple and easy. You may claim the refund when you file your ITR for the current financial year. According to the Income Tax Act, you must file your returns before July 31 during the relevant assessment year. The financial year following the current year is known as the assessment year.

You may file your return either by uploading a completed Excel form or the Java utility form. Alternatively, you may provide the relevant information in the online forms available on the website. However, this online facility is available only if you file ITR 1 or ITR 4.

How to refund claims reflected in the ITR?

Here is the procedure on how to claim a tax refund. First, you must complete the entire ITR form that is relevant to your return. Next, you must click on the validate button that is found on the ’taxed paid and verification’ sheet. On submitting this information, the system automatically calculates the refund amount that is due to you. The refund amount is reflected in the ’refund’ row in the form.

However, you must remember that the amount shown in the ’refund’ row is only the amount you claim is due to you. This may not necessarily be accepted by the tax authorities and paid by the Income Tax department. The department will first process your returns and then decide on the amount that will be refunded to you. This amount may or may not be the same from the one you calculated at the time of filing your ITR.

The Income Tax department processes your return and verifies that all the given information is genuine and accurate. Once the processing is completed, you will receive intimation of the result. Generally, you will receive intimation under section 143(1) that shows one of the following:

  • The tax calculation matches the department’s calculation, which means there is no further tax liability
  • The tax calculation mismatches that of the department and there is an additional tax liability known as demand payable by you or your refund claim is partially accepted (reduce amount) or rejected
  • Your calculation matches the department and your entire claim is accepted

This intimation is often sent via an email along with a message on your registered mobile number stating that your ITR is processed. When you want to know how to claim TDS refund, you should also bear in mind that the Income Tax department might require additional information or your case may be scrutinized. In these cases, a different intimation is sent to you.

How to save tax without going through the process of refunding?

A refund may also arise if your employer has reduced TDS but your liability is lower because you have invested in tax-saving options. Investments made under section 80C of the Income Tax Act offer tax benefits by reducing your taxable income. The maximum limit for this deduction is INR 1.5 lakh per annum.

There are several tax saving options such as Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), tax-saving fixed deposits (FDs), National Pension System (NPS), and many more. It is important to make the right choice amongst the different available options. This may be a confusing and daunting task especially when you are also trying to understand how to save tax.

Several tools are available that help you evaluate the various investment options. Among these is ARQ, our scientific investment engine that offers customized recommendations through an automated process. It uses advanced quants and algorithms to analyze and evaluate the different options using more than a billion data points. These are then matched to your financial goals, risk appetite, and lifestyle to offer the most suitable investment recommendations.

In addition to providing customized recommendations to help you understand how to save tax, ARQ evaluates your current portfolio. Your investments are evaluated based on different variables to offer recommendations on whether to stay invested or exit your investments and move to other products. Download our mobile app today and receive recommendations on your smartphone.


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