How to Claim TDS Refund While Filing ITR in India: Step-by-Step Guide

Last Updated on July 28, 2026

If tax was deducted at source on your salary, fixed deposit interest, or rent, and your actual tax liability turns out to be lower, that difference is not lost. It comes back to you as a TDS refund, but only if you file your ITR correctly and complete a few steps most first-time filers overlook.

This guide walks through how a TDS refund actually works, why excess TDS happens in the first place, and how to avoid the delays that keep so many refunds stuck for months.

What is a TDS Refund?

A TDS refund arises under Section 237 of the Income Tax Act when the tax deducted at source on your income exceeds your actual final tax liability for the year. It is not a bonus from the government; it is your own money, deducted in advance by an employer, bank, or tenant, being returned once your real tax position is computed through your ITR.

Why Does Excess TDS Happen?

• Your total income falls below the taxable threshold, but TDS was still deducted
• You did not submit investment proofs to your employer in time, resulting in higher salary TDS
• Banks deduct TDS on fixed deposit interest even when your overall income is not taxable
• TDS deducted on rent received exceeds your actual tax liability after deductions
• Your employer used an incorrect income projection while calculating monthly TDS

Form 15G and 15H – Prevent Excess TDS Before It Happens

If you’re repeatedly claiming TDS refunds on FD interest, you may be eligible to prevent the deduction at source:

Form	Who Can Use	Condition
Form 15G	Individuals below 60 years	Total income below basic exemption limit (₹2.5L old regime / ₹3L new regime) AND estimated tax liability is nil
Form 15H	Senior citizens (60+ years)	Estimated tax liability is nil (regardless of income amount)

How to submit: Submit Form 15G/15H directly to your bank at the beginning of every financial year, not when interest is about to be credited. Banks accept these forms online through net banking portals.

Limitation: These forms cannot be submitted by anyone with tax liability, only those with nil tax liability for the year. Submitting false 15G/15H declarations is an offence under Section 277 of the Income Tax Act.

Who Can Claim a TDS Refund?

• Salaried individuals whose employer deducted more TDS than their final liability
• Senior citizens and others with FD interest TDS despite non-taxable income
• Landlords whose tenant deducted TDS on rent exceeding their actual tax due
• Freelancers and professionals with TDS deducted by clients under Section 194J

Private limited companies claiming TDS refunds should file ITR-6. Our guide on how to file ITR for a private limited company covers the complete process.

Documents Required

• Form 16 from your employer, and Form 16A for non-salary TDS
• Form 26AS and the Annual Information Statement, to verify TDS credited against your PAN
• Bank account details, pre-validated on the income tax e-filing portal
• Proof of deductions and exemptions claimed, in case of scrutiny

Need help reconciling your TDS records before filing? Our experts can assist you.

Step-by-Step Process to Claim TDS Refund Online While Filing Income Tax Return

Step 1. Reconcile your TDS records

Match the TDS shown in Form 16 or 16A against your Form 26AS and AIS to confirm the correct amount is credited to your PAN.

Step 2. File the correct ITR form

Choose the ITR form matching your income sources, and report all TDS credits and deductions accurately.

Step 3. Pre-validate your bank account

Ensure your refund bank account is pre-validated on the e-filing portal, since refunds cannot be credited otherwise.

Step 4. E-verify your return

Complete e-verification within 30 days of filing, through Aadhaar OTP, net banking, or another accepted method, since unverified returns are not processed.

Refund Failed or Returned: How to Request Reissue?

A common frustration: the refund is processed by the Income Tax Department but doesn’t reach your account because of a bank account issue. This happens when:

• Bank account number changed after pre-validation
• Account was closed or frozen
• IFSC code changed (bank merger; many Vijaya Bank, Dena Bank, and Andhra Bank account holders faced this)

How to request refund reissue:

1. Log in to the income tax e-filing portal
2. Go to Services → Refund Reissue
3. Select the relevant assessment year
4. Choose/update the pre-validated bank account
5. Submit request with e-verification

Timeline: Reissued refunds typically take 20–45 additional days after the reissue request. Submit immediately upon discovering the failed credit; the reissue option is available for refunds that bounced back to the department.

Fees / Cost

There is no government fee for claiming a TDS refund, since it is processed as part of your regular ITR filing. Costs, if any, are limited to professional fees if you engage a CA or tax consultant to prepare and file your return.

Interest on Delayed Refunds: Section 244A

If your refund exceeds 10% of your total tax payable, you are entitled to simple interest at 0.5% per month, or 6% per annum, under Section 244A. If you filed on or before the due date, interest runs from 1 April of the assessment year until the refund is issued. If you filed a belated return, interest runs only from your actual filing date. No interest is paid for any period of delay caused by your own errors, such as incorrect details or not responding to a department notice.

Timeline

Return Type	Typical Processing Time
ITR-1 (salaried, simple) with e-verification	15–45 days from e-verification
ITR-4 (presumptive, simple)	20–60 days from e-verification
ITR-2 (capital gains, multiple sources)	45–90 days from e-verification
ITR-3 (business income)	60–120 days from e-verification
Returns with large refunds (>₹1 lakh)	May take 3–6 months; sometimes sent for scrutiny
Returns with AIS/Form 26AS mismatches	Until mismatch is resolved — indefinite delay possible

How to Track Your Refund Status?

• Income tax e-filing portal → Services → Know Your Refund Status
• NSDL portal: tin.tin.nsdl.com/oltas/refundstatuslogin.html
• Helpline: 1800-103-4455 (toll-free)

Refund status typically appears within 10 days of e-verification. If no status appears after 10 days, the return may have a processing issue requiring attention.

Compliance Requirements

• Ensure that your Form 26AS and AIS details match your reported ITR amounts
• Report any income from Section 244A interest earned as Income from Other Sources for the relevant year
• Provide answers to any department questions on time to prevent forfeiture of refund interest for that period
• Ensure there are no demands pending in previous years, which can be set off from your refund amount. In general, there are only four issues that prevent people from claiming their refunds on time: inconsistency in TDS, inconsistency in form amounts, a bank account that hasn’t been validated, and failure to do online verification.

Section 154 Rectification: When Processed Refund is Lower than Expected

After your return is processed (Intimation under Section 143(1) received), if the refund shown is lower than what you claimed, it could be because:

• A TDS credit wasn’t matched due to deductor’s wrong PAN entry
• Deductions claimed were partially disallowed in processing
• Computation error by CPC

How to request rectification:

1. Log in to e-filing portal → Services → Rectification
2. Select the assessment year and order reference
3. Choose rectification type: “Tax Credit Mismatch” or “No further data correction required”
4. Submit with EVC or DSC

Note: Rectification under Section 154 can only correct errors apparent from the record, wrong arithmetic, TDS mismatch, incorrect relief under Section 89. It cannot be used to add new claims or change ITR form selections.

The typical processing time for a Section 154 rectification is 30–90 days; track status on the portal under “Rectification Status.”

Penalty / Consequences

• Legal: A refund claimed on incorrect figures can attract scrutiny or a rectification notice
• Financial: Interest under Section 244A is forfeited for any period the delay is attributable to you
• Business: An unverified return is treated as not filed, cancelling your refund claim entirely

Avoid refund delays with accurate, professionally reviewed ITR filing.

Common Mistakes

• Not pre-validating the bank account before filing, delaying credit even after processing
• Mismatches between TDS claimed in the ITR and figures reflected in Form 26AS or AIS
• Forgetting to e-verify the return within the 30-day window
• Filing the wrong ITR form for your actual income sources

Filing an accurate return to claim TDS refund also protects your right to carry forward business losses; our guide on how to carry forward losses while filing ITR explains the dual importance of timely filing.

Benefits of Getting This Right

• Faster refund credit, without the delays caused by mismatches or verification lapses
• Entitlement to interest under Section 244A when the department delays processing
• Cleaner tax records for future loan applications and visa documentation
• Avoids unnecessary rectification requests or scrutiny notices

Practical Scenario

A salaried employee submits investment proofs to her employer late in the financial year, resulting in higher TDS deducted on her salary than her actual liability required. She files her ITR before the due date, reporting Rs. 1,00,000 as a refund claim, and completes e-verification the same day. Since the refund exceeds 10% of her tax payable and processing takes a few months, she receives interest under Section 244A calculated from 1 April of the assessment year, credited along with her refund.

Expert Tips / Best Practices

• Submit investment proofs to your employer well before the financial year ends, to avoid excess TDS altogether
• File your ITR before the due date, since belated filing shortens your interest calculation period
• Cross-check Form 26AS and AIS before filing, not after receiving a mismatch notice
• Keep your bank account pre-validated year-round, not just during filing season

On-Time vs Belated Filing: Impact on Refund Interest

Aspect	Filed On or Before Due Date	Belated Return
Interest start date	1 April of the assessment year	Actual date of filing
Interest rate	0.5% per month (6% per annum)	0.5% per month (6% per annum)
Condition for interest	Refund must exceed 10% of tax payable	Refund must exceed 10% of tax payable
Overall interest earned	Generally higher, longer period	Generally lower, shorter period

Understanding filing deadlines is critical for maximising your refund interest; our guide on the last date for ITR filing covers all due dates and the consequences of belated returns.

How Kanakkupillai Can Help?

Kanakkupillai helps individuals reconcile Form 26AS and AIS with actual TDS credits, prepares and files the correct ITR form, and ensures bank pre-validation and e-verification are completed properly, so refunds are processed without avoidable delays.

Conclusion

Claiming a TDS refund is not a separate process; it happens automatically when your ITR is filed accurately and verified on time. Most delays come down to a handful of avoidable errors, mismatched TDS figures, an unvalidated bank account, or a missed e-verification window, all of which are easy to fix with a bit of care before you file.

FAQs

1. Do I need to file a separate form to claim a TDS refund?

No, there is no standalone refund application. The refund is automatically computed and claimed when you file your ITR, based on the difference between TDS credited to your PAN and your actual tax liability.

2. Is the TDS refund amount itself taxable?

No, the refund is your own money being returned and is not taxable. However, any interest received on a delayed refund under Section 244A is taxable as Income from Other Sources.

3. Why is my refund status still showing as pending after e-verification?

This is often due to mismatches between your ITR and Form 26AS or AIS, or additional checks on complex ITR forms. Simple forms like ITR-1 typically process faster than ITR-2 or ITR-3.

4. Can my TDS refund be adjusted against a past tax demand?

Yes, the department can offset your current refund against any outstanding demand from previous years. You will usually receive a notice explaining the adjustment before the net refund is credited.

5. What happens if I miss the e-verification deadline?

An ITR that is not e-verified within 30 days of filing is treated as not filed, which cancels your refund claim entirely. You would need to file the return again to reclaim the refund.

6. Can I still claim a TDS refund if I file a belated return?

Yes, you can claim a refund even in a belated return filed within the extended deadline. However, interest under Section 244A will only run from your actual filing date, not from the start of the assessment year.

7. What is a defective return and how does it affect my TDS refund?

Under Section 139(9), if the Income Tax Department finds errors in your return, the wrong form, missing schedules, or computation inconsistencies, they issue a defective return notice. You have 15 days to correct and resubmit. If not corrected within 15 days, the return is treated as invalid, and your refund claim is cancelled. Check your registered email and income tax portal inbox within 2–3 weeks of filing to catch any defective return notice within the response window.