What is TDS?
TDS which stands for tax deducted at source has been laid down by the Income Tax Act. Under this Act, if any Company or person makes a payment, then they have to deduct tax at source if their payment exceeds a certain threshold limit, which has been specified by the department. The TDS has to be deducted by keeping the prices in mind which has been prescribed by the Tax Department.
There are a deductor and a deductee in the pROCess. A deductor is a person or Company which makes the payment after deducting TDS, on the other hand, a deductee is that person or firm which accepts or receives the payment. The deductor has to deduct the TDS and submit it to the government, before making any form of payment. The TDS is linked to the PAN and therefore can be deduced in any form, either cash, cheque, credits or any other form of payment. The following are the types of payments in which the TDS has to be deducted:
Interest payments by Banks
What is TDS refund?
If the tax deducted at source is higher than the actual taxable amount at the end of a financial year, then the applicant is applicable for applying for a TDS refund. In other words, the TDS Refund can be defined as the tax deducted at source and the actual taxable amount. This TDS refund can be claimed back by you after you file the income tax returns for that particular financial year.
When is TDS Refund applicable?
You can file Tax Refund under the following circumstances:
If your employer deducts more tax than your tax amount which is payable, then your difference of the tax has to be notified in the form of ITR. After this, you can claim for the tax refund. Provide the account number, bank name and IFSC code at the time of filing the ITR.
If your bank is deducting TDS on the fixed deposits but you do not have any taxable amount in your account, then you can file a form 15 G with the bank concerned and notify TDS refund on fixed deposit.
In the case of a senior citizen, the income which is earned on the interest of the FD is exempted from the deduction. If there is a tax deduction over your interest amount, then the senior citizen can claim for a TDS refund.