In case financial declarations made at the beginning of the year are greater than or lesser than the investment proofs submitted at the end of the financial year, a refund/lumpsum deduction of taxes comes into force. So if there is a difference between in the total tax deducted at the end of financial year and the total tax that is deducted from the income tax that one pays for the particular year, a TDS refund needs to be processed.
Aman works in an MNC in Hyderabad. But somehow he was late in submitting his document for HDFC premium which is exempted under 80C section and so Rs 10000 extra was deducted as TDS.
- The total tax to be paid by Aman for 2014-15: Rs 40000.
- The tax that got deducted from Aman's salary: Rs 50000.
- Aman's eligibility for tax refund is: Rs 50000 - Rs 40000 = Rs 10000.
So we can clearly see that by the above example Aman had to pay total tax of Rs. 40000 wherein he ends up paying Rs 50000 due to not giving the insurance premium payment receipt on time to the employer thereby ended up paying extra in taxes.
- In the same way Ratan was not able to invest his Rs 30000 in the investments as per time allotted by the employer. He was indecisive about whether to go on investing in life insurance policy or get a fixed deposit for long term savings. Pondering upon this thought of his, he missed the last date to submit the income tax proof as asked by the employer. So in this way also Ratan ended up paying more tax for the financial year even though he had done the investments for the concerned year.
These are some of the typical situations that are faced by the salaried individual every year by lots of individuals and so TDS refund process comes into action. The sooner you file the income tax return the earlier you can get your TDS refunded.