[FAQs] Income Tax Return – Tax Payment | TDS | TCS | Refunds

  • ITR Week 2024-25|Blog|Income Tax|
  • 8 Min Read
  • By Taxmann
  • |
  • Last Updated on 19 June, 2024

TDS Refund

A tax refund is a repayment to taxpayers of any excess amount paid to the government in taxes. This overpayment can occur for various reasons, such as errors in tax withholding from wages, overestimating tax payments, or eligibility for refundable tax credits. After the taxpayer files their tax return and the government verifies the overpayment, the excess amount is refunded, typically via direct deposit to the taxpayer's bank account.

FAQ 1. Is pre-validating a bank account on the e-filing portal mandatory to claim a refund?

Yes, it is mandatory to pre-validate your bank account on the e-filing portal to claim a tax refund. This ensures that the bank account is active and owned by the taxpayer, which helps minimize errors and prevent fraud.
To pre-validate your bank account, follow these steps:

  1. Go to Profile > My Bank Account > Add Bank Account.
  2. Provide the required details and validate the account.

Upon successful submission, a validation request will be sent to the bank or NPCI. Once validated, you can nominate this account to receive your tax refund.

FAQ 2. ITR forms require details of the Legal Entity Identifier (LEI). What is it, and who needs to report it?

The Legal Entity Identifier (LEI) is a 20-character alphanumeric code used to uniquely identify parties in financial transactions worldwide. It enhances the quality and accuracy of financial data reporting systems, aiding in better risk management.

According to RBI regulations, all entities (non-individuals) must include the LEI information for single payment transactions of Rs. 50 crores and above through NEFT and RTGS. The new ITR forms have a designated column for the LEI details, which is mandatory for taxpayers claiming refunds of Rs. 50 crores or more.

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FAQ 3. Can I claim the credit of tax deducted in advance on income that is taxable in subsequent years?

Under certain provisions, tax is deducted at source at the time of payment or credit, whichever is earlier, including advance payments. The ITR forms have a schedule for reporting tax deducted in previous years, allowing credit in future years. However, you cannot claim TDS credit for income that will be taxable in subsequent years. Such TDS credits can be carried forward and claimed in the year the income is taxed.

FAQ 4. I filed an income tax return to claim a tax refund, but it failed because I mentioned an incorrect bank account number. How can I submit the correct bank account number?

To submit the correct bank account number for a tax refund re-issue, follow these steps:

  1. Log in to incometax.gov.in
  2. Go to ‘Services’ and select ‘Refund Re-issue’.
  3. Select ‘Create Refund Re-issue Request’.
  4. Choose the record for which you want to submit a refund re-issue request.
  5. Select the bank account where you want to receive the refund.
  6. Click ‘Proceed to Verification’.

FAQ 5. What should I do in case of a TDS mismatch?

When filing your return, you may notice that the credit for Tax Deducted at Source (TDS) you claimed matches the balance shown in Form 26AS. However, the Assessing Officer (AO) might still issue a demand for the differential amount of TDS. The Central Board of Direct Taxes (CBDT[1]) has identified several common reasons for such discrepancies:

  1. Incorrect or invalid TAN (Tax Deduction and Collection Account Number) of the deductor.
  2. Using the same TAN for multiple deductors.
  3. Providing details in incorrect TDS Schedules on the Return Form.
  4. Entering wrong challan particulars regarding Advance tax, Self-assessment tax, etc.
  5. Including TDS deducted by one entity under another deductor’s TDS amount.

Due to these errors, the tax credit may not be recognized during the return processing, even if the Form 26AS statement reflects the correct amount. Therefore, the CBDT advises taxpayers to verify whether the demand raised is due to a tax credit mismatch caused by such errors. If so, you need to submit a rectification request with accurate TDS or tax details to correct the discrepancies.

A. Submitting Rectification Requests

Rectification requests should be directed to your jurisdictional Assessing Officer if:

  1. The return was processed by this officer, or
  2. You have been notified by the Central Processing Centre (CPC) in Bengaluru that the jurisdictional Assessing Officer will handle the rectification.

For all other cases processed by the CPC in Bengaluru, you can make an online rectification request by following these steps:

B. Step-by-Step Guide for Online Rectification:

  • Step 1 – Log in to the e-filing portal.
  • Step 2 – Navigate to Services > Rectification.
  • Step 3 – Click New Request on the subsequent page.
  • Step 4 – Choose the relevant Assessment Year from the drop-down menu and click Continue.
  • Step 5 – On the next screen, select Tax Credit Mismatch Correction from the available rectification types, which include:
    1. Reprocess the return
    2. Tax credit mismatch correction
    3. Additional information for 234C interest
    4. Status Correction
    5. Exemption section correction
    6. Return data correction (Offline)
    7. Return data correction (Online)

Tax Credit Mismatch Correction

  • Step 6 – The schedules for the selected request type will be auto-populated based on records in the processed return. To modify or remove a schedule, select it and click Edit or Delete.
  • Step 7 – Enter the accurate details in the relevant schedules and click Continue to submit your request.

Tax credit mismatch correction

Upon submission, you will be directed to the verification page.

C. Additional Steps for TDS Return Errors

If the TDS mismatch results from an error in the TDS return filed by the deductor, you must contact the deductor to rectify the TDS return. This ensures that the correct details are reflected and the mismatch is resolved.

FAQ 6. How can you claim TDS credit in ITR if the deductor did not deposit TDS?

To claim TDS credit, a taxpayer should first approach the deductor and request them to deposit the TDS with the government and file a TDS statement. Unfortunately, the taxpayer has no legal authority to compel the deductor to do so. If the deductor refuses, the taxpayer can submit proof of TDS to the department.

Since ITR forms do not allow attachments, the taxpayer cannot directly submit supporting documents with the ITR for TDS claims. Therefore, it is advisable to file the ITR, claim TDS credit, and wait for processing. Once the ITR is processed, the taxpayer may receive a notice of a TDS mismatch.

Upon receiving such a notice, the taxpayer can respond with supporting documents to demonstrate that the TDS was indeed deducted. These documents can include salary slips and bank statements showing net salary or other income credited after TDS deductions. If the documents are verified and found to be correct, the Assessing Officer (AO) may allow the TDS credit and cancel any demand raised by the CPC. However, if the AO does not allow the TDS credit, the taxpayer’s only recourse is to approach the court.

It is important to reference Instruction No. 275/29/2014 dated 01-06-2015, which directs that under Section 205, an assessee should not be required to pay tax to the extent that tax has been deducted from their income where tax is deductible at source under Chapter XVII. Thus, the Act prohibits direct demand against the assessee in such cases, and any demand due to a tax credit mismatch cannot be enforced coercively. Assessing Officers should ensure that assessees are not inconvenienced due to the deductor’s failure to deposit tax.

Read More
Can I claim credit of TDS deducted by the employer but not paid by it to Govt.? on Taxmann.com/Practice

FAQ 7. I have a bank fixed deposit of Rs. 1,50,000. My total income (including accrued interest on FDs) is below the taxable limit. How can I avoid the deduction of tax on interest income?

You can avoid tax deduction on interest income by submitting a self-declaration to the bank. Senior citizens should file Form 15H, while others can file Form 15G.

FAQ 8. How can I avoid a tax deduction if I earn an interest income of Rs. 40,000 from savings deposits, and my total income, including such interest income, is below the taxable limit?

Tax is not deducted on interest payable on savings deposits. However, for interest on time deposits exceeding Rs. 40,000, tax will be deducted under Section 194A. To avoid TDS, you can submit a declaration under Section 197A using Form 15G or Form 15H, provided your relevant income does not exceed the maximum exemption limit and your estimated total income for the financial year is nil.

FAQ 9. My return has been processed, and it shows an ‘Outstanding Tax Demand’. What should I do now?

You can respond to the outstanding demand online through the e-filing portal. Follow these steps:

  1. Log in to the e-filing portal.
  2. Navigate to Pending Actions > Response to Outstanding Demand to view a list of outstanding demands. To pay, click ‘Pay Now’.
  3. Click ‘Submit Response’ on the Response to Outstanding Amount page and proceed according to the situation:
    • If the demand is correct and unpaid, select the relevant option, and you will be directed to the e-Pay tax page for payment. Successful payments will show a success message and a Transaction ID.
    • If the demand is correct but already paid, add the challan details including Type of Payment, Challan Amount, BSR Code, Serial Number, and Date of Payment. Upload a copy of the challan and click Save. A success message and Transaction ID will be displayed upon validation.
    • If you disagree with the demand (fully or partially), provide reasons for disagreement and confirm your submission. You will receive a success message and a Transaction ID.

Keep a record of the Transaction ID for future reference.

FAQ 10. The income-tax department has raised a demand against Mr A for the assessment year 2023-24. He did not pay the tax demand and filed an ITR for the next assessment year, claiming a refund. Can this refund be adjusted against his pending tax demand?

Yes, the CBDT has authorized the CPC to adjust tax demands against any refunds due to the assessee. Therefore, the refund claimed by Mr A for the next assessment year can be offset against the outstanding demand for the assessment year 2023-24.

FAQ 11. Should I pay a fee under Section 234F if there is a delay in filing my income tax return?

Under Section 234F, a fee is levied if the return of income is not filed by the due date specified in Section 139(1). The fee is Rs. 5,000 if filed after the due date, but if the total income does not exceed Rs. 5 lakhs, the fee is Rs. 1,000. This fee does not apply to taxpayers for whom filing a return is not mandatory and who are filing voluntarily.

Read More
Fee for default in furnishing return of income on Taxmann.com/Practice

FAQ 12. I am a non-resident filing an Income-tax return in India. I do not maintain a bank account in India. Can I receive my tax refund in a foreign bank account?

Yes, the income-tax department allows non-residents to receive tax refunds in a foreign bank account. When filing the ITR, non-residents should provide the following details:

  1. SWIFT Code of the foreign bank account
  2. Name of the bank
  3. International Bank Account Number (IBAN)

[1] Press Note No. 402/92/2006, dated 17-04-2014,

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Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

4 thoughts on “[FAQs] Income Tax Return – Tax Payment | TDS | TCS | Refunds”

  1. For AY 2021-22 (FY 2020-21) I filed my ITR on 14.09.2021 well within the time limit of the extended date intimated by ITD.
    However, one of the Tax Deductors did not upload part of the TDS deducted by them before I filed my ITR on 14.09.2021 as a consequence of which I could not claim the TDS amount while filing my ITR as it was not reflecting in Form-26AS.
    He uploaded the TDS deducted much later and it was reflecting in Form-26AS only in Dec, 2021. In the meantime my ITR for AY 2021-22 had been processed by the ITD.
    How to claim this additional TDS deposited late by the Tax Deductor?

  2. I have raised invoice for service in FY 2021-22 and showing as my income. But the customer has booked the same in FY 2022-23 and deducted TDS for AY2023-24. Do I need to pay tax not? Can I claim TDS credit in advance?

    1. Hi Pankaj, There is no provision under the Income-tax Act that allow credit of TDS in advance. To claim the benefit of TDS, you need to ask the customer to revise his TDS return and show income in FY 2021-22. Once he revises the TDS return, you can file a revised ITR to claim the benefit of TDS.

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