Paid too much TDS? Here’s how you can get it back

Getting a refund

Even though you will be able to get the tax adjusted and avoid another hefty TDS in the March salary, many of you may have already paid excess tax. The only way you can get it back is by filing your tax returns. The sooner one files the return, the earlier he gets his refund. Now that the CBDT has made it mandatory for taxpayers to quote their bank account number and the bank's IFSC code in the tax form, refunds are much quicker. If you are lucky, you get the refund in two to three months, but be prepared to wait for a longer period.

If the tax refund gets delayed due to any reason, the taxpayer is entitled to a 6% interest on the amount. The interest will start accruing from the first month of the assessment year (April 2014 in this case). However, no interest is payable if the refund amount is less than 10% of the tax payable during the year.

 

Rightsize your TDS

Many of these problems can be avoided by making tax planning an integral part of your investment schedule. Instead of leaving it for the last minute, you should start your tax planning from the very first month of the new financial year. Remember that the interest the government pays on delayed refund is just half of what it charges you for delayed tax payments.

There is a 1% late fee charged for every month of delay in paying your tax dues. The smart taxpayer manages his finances in a way that the TDS is just equal to the tax he is supposed to pay for the year. To do that, you should also be aware of all the deductions you are eligible for and should inform your employer well in advance.

While most people are familiar with Section 80C and Section 80D benefits, there are many other deductions that an employer would incorporate in the Form 16 if you inform on time (see table).

Source:-The Economic Times