Banks in India deduct Tax Deducted at Source (TDS) on interest income earned from fixed deposits, recurring deposits, or savings interest (in some cases).
If your total income is below the taxable limit or TDS deducted exceeds your actual liability, you can claim a refund by filing an Income Tax Return (ITR).
This blog explains how to claim a refund for TDS deducted by banks, the forms to use, and what documents to submit for the FY 2024-25 (AY 2025-26).
Legal Reference
- Section 194A, Income Tax Act, 1961
- Section 237 to 245, Income Tax Act (Refund Provisions)
- Form 16A, Rule 31 of Income Tax Rules
- Income Tax Department Portal: https://www.incometax.gov.in
When Do Banks Deduct TDS?
Banks deduct TDS at 10% (or 20% if PAN is not provided) when:
- Interest on FDs or RDs exceeds ₹40,000 in a financial year (₹50,000 for senior citizens)
- Savings account interest is not subject to TDS, but is still taxable
- TDS deducted is reflected in Form 16A and Form 26AS/AIS
When Can You Claim a Refund?
You are eligible for a refund if:
- Your total taxable income is below exemption limit (₹2.5 lakh for individuals, ₹3 lakh for seniors)
- Your total tax liability is less than TDS already deducted
- You submitted Form 15G/15H late and TDS was deducted anyway
- You earned only bank interest and TDS was wrongly deducted
Documents Required
- Form 16A (TDS certificate issued by bank)
- Form 26AS or AIS (Annual Information Statement from portal)
- Bank interest certificates or FD statements
- PAN and Aadhaar (linked)
- Bank account details for refund credit
Step-by-Step Guide to Claim TDS Refund
Step 1: Gather Form 16A and interest certificates from your bank
Step 2: Download and reconcile Form 26AS and AIS from the income tax portal
Step 3: Determine your total income and deductions (80C, 80D, 80TTB)
Step 4: Compute total tax liability
Step 5: If TDS > tax liability, you’re eligible for refund
Step 6: File ITR (usually ITR-1 for individuals) at https://www.incometax.gov.in
Step 7: Validate return and verify using Aadhaar OTP, net banking, or EVC
Step 8: Wait for processing and check refund status under “View Returns/Forms”
Refund Credit Timeline
- Refunds are usually credited within 30-90 days of ITR verification
- Track under “Refund Status” via the e-Filing portal or TIN-NSDL
- Make sure bank account is pre-validated and linked to PAN
Common Errors to Avoid
- Not filing ITR assuming TDS refund is automatic
- Submitting wrong bank account for refund credit
- Ignoring interest income under 80TTA/80TTB and claiming excess refund
- Delayed ITR verification, resulting in processing delays
Example Scenario
- Priya earns ₹2.2 lakh interest from FDs (TDS of ₹22,000 deducted)
- She has no other income
- She files ITR-1 and claims refund of full ₹22,000
- Refund credited within 45 days of ITR verification
Conclusion
TDS deducted by banks can often exceed your actual tax liability, especially for low-income earners and senior citizens. Filing your ITR is the only legal way to claim that refund, and timely filing ensures quicker processing and credit.
Call to Action
Has your bank deducted TDS even though your total income is below the exemption limit?
Let’s help you file your ITR and get your refund without delay.
Book a TDS refund consultation with Anshul Goyal, Chartered Accountant, and file your return correctly.
Visit: https://calendly.com/anshulcpa
Disclaimer
This article is for educational purposes only. Refund eligibility and processing depend on your accurate income disclosure and timely ITR verification.
Frequently Asked Questions
1. Can I claim a refund without filing ITR?
No. Filing ITR is mandatory to claim any TDS refund.
2. What if I submitted Form 15G/15H late?
TDS deducted can still be refunded through ITR filing.
3. How long does it take to get the refund?
30-90 days post e-verification, if no errors are found
4. Is savings account interest taxable?
Yes, but eligible for deduction under Section 80TTA/80TTB
5. Do I need to attach Form 16A while filing ITR?
No. But keep it for record and reconcile with Form 26AS