If you are a working professional you would be aware that the actual payment consideration you receive from your employer is lower than your total CTC because of the TDS charged on it.
Now, the amount of TDS charged may not necessarily be the right amount every time. There are instances wherein employers deduct excess TDS due to various reasons.
It could either be an error from the employee's side in submitting the necessary proofs of investment or a delay in submitting them due to last minute tax saving investment decisions.
Of course you can get back the excess TDS paid. However, to understand this better let us take you through the TDS process briefly.
Tax deducted at source (TDS), as the name implies, aims at collection of tax revenue at the source of income.
In your monthly pay, your employer deducts a certain percentage from their pay packages.
After these taxes are deducted, all employees receive a pay by which the employer will credit the same in favour of the Central Government in any branches of the RBI, SBI or any other authorized banks, within 7 days of the last day of the month for which income tax has been deducted from the employees' salaries.
At the end of the financial year, every salaried employee (from whom the deductions have been made) is issued a Form 16 from the employer.
Now, your job is to fill this form accurately along with providing document proofs of all your investments and expenses (loan, etc.).
If you find yourself stuck in a scenario where you have paid excess TDS, you need to fill up the Form 16 issued by your employer and claim your excess TDS paid by filing your returns.
The earlier you file your returns, the chances of getting back your refund is higher. Since transactions can now take place electronically, you can expect the refunds to come in much quicker than earlier.
Just in case the tax refund gets delayed, you will be entitled to a 6% interest on the amount. The interest will start accruing from the first month of the assessment year.
However, no interest will be payable if the refund amount is less than 10% of the tax payable during the year.
To rule out any kind of confusion in the TDS amount, you can always check your Tax Credit Statement Online (Form 26 AS) if you're a PAN holder. To view your tax credit click here
Ultimately, the best way to avoid any such hassle is to effectively plan your taxes every year. On the basis of your income and your estimated annual expenditure, you should plan your investments very well in advance.
For this you need to be well aware of all the deductions you are eligible for, analyze the various tax saving avenues well and finally take an informed decision while making such investments.
You can always take the help of professionals who help you plan your investments so that you can gain maximum benefits and save on taxes.
The article is written by Mr. Vikram Ramchand, Founder at MakeMyReturns.com