How to claim a refund of excess TDS on salary

If your employer deducted more TDS than your actual tax, the difference is your money, but you get it back only through your return. File the return, show the TDS as tax already paid, and e-verify within 30 days. The department then processes the return and sends the refund to your validated bank account.

The figures below are for the tax year 2025-26. For the tax year 2026-27 the Income-tax Act, 2025 keeps the same rebate limits (section 156) and the same refund interest rule, 0.5% a month with nothing paid below 10% of the tax (section 437).

Why TDS on salary ends up higher than your tax

• Projected income. Your employer estimates your year's income and spreads TDS across months. Bonuses or changed pay can leave it off.
• Regime default. Employers usually apply the new regime unless you declare the old one. If you later find the old regime better, or the reverse, TDS and tax differ.
• Missed deductions. Investments or premiums you did not declare were not counted. See our guide on how to claim deductions missed by your employer.
• Two employers. If you changed jobs, each may have deducted without knowing the other's pay, or the second employer may have deducted at a higher rate.
• Rebate. TDS is sometimes deducted when the rebate would have made the tax nil.
• Other TDS. Banks deduct TDS on interest even when your total tax is lower.

Step 1: Find your TDS credit

Check how much TDS is credited against your PAN in:

• Form 26AS for tax years up to 2025-26.
• Form 168 from the tax year 2026-27.
• Your AIS, which also lists it.

Match it with your employer's Form 16. If the employer deposited less than it shows in Form 16, the credit may be short, and you should ask the employer to correct the TDS statement.

Step 2: Work out your actual tax

Compute your tax under both regimes and compare. In TaxCare's rules for the tax year 2025-26 the new regime rebate (up to ₹60,000 when total income is ₹12,00,000 or less) makes tax nil for many salaried people, so TDS deducted can come back in full. Under the old regime, the rebate is up to ₹12,500 when total income is ₹5,00,000 or less.

Example. Salary of ₹6,00,000, new regime.

• Taxable salary: ₹6,00,000 − ₹75,000 = ₹5,25,000.
• Slab tax: 5% on ₹1,25,000 above ₹4,00,000 = ₹6,250.
• Rebate removes the tax, so tax is nil.
• Your employer deducted TDS of ₹25,000.
• Refund: ₹25,000.

Step 3: File the return

You must enter the TDS under "taxes paid" with the employer's TAN and amounts that match the statement. Mismatches can delay or reduce the refund. Add the bank account where you want the refund. Pick an account that is validated on the portal and nominated for refund: the department's manual says an account must be validated before it can be nominated for refunds (My Profile > My Bank Account).

If your income is below the filing limit but TDS was deducted, you do not have to file, but you must file to get the refund. See our guide on the benefits of filing when you owe no tax.

Step 4: E-verify

A return that is not e-verified within 30 days is treated as never filed, so no refund is processed. See our guide on how to e-verify your ITR.

Step 5: Track the refund

After verification, the return moves through the stages: filed, verified, processed and refund issued. Our guide on refund status and delays explains each.

Interest on a refund

On TaxCare's rules, interest on a refund is 0.5% per month of the refund. It is not paid if the refund is less than 10% of the tax determined. Where the refund is of TDS, TCS or advance tax and the return was filed by the due date, interest runs from 1 April after the end of the tax year until the refund is granted, counting each month or part of a month. If the return was filed late, it runs from the date of filing. Any period of delay caused by you is left out.

Refund interest is income. The return reports it under income from other sources as "Interest from Income Tax Refund".

What if the due date has passed?

You can still file a belated return until 31-Dec after the tax year, and the refund is still due. A belated return cannot use the old regime in TaxCare's rules. A late fee (₹5,000, or ₹1,000 if income is ₹5,00,000 or less) applies only to a person who was required to file. A person who files only to claim a refund, with income below the limit, is not required to file.

If you have missed even the belated window, the updated return (ITR-U) cannot give a refund. The remaining route is a request for condonation of delay to the Income Tax authorities, made on the portal. The CBDT's Circular 11/2024 lets them admit a late refund claim only in genuine hardship, within six years from the end of the tax year, and no interest is paid on a refund allowed this way.

If the refund is lower than expected

The department may adjust the refund against an old demand, or reduce it if its figures differ from the return. You will see this in the intimation after processing. Compare the intimation with your computation. If the refund was set off against a demand, the department must tell you first, and you respond under Pending Actions > Response to Outstanding Demand, either agreeing or disagreeing in full or in part. If you do not respond, the demand is confirmed and adjusted against your refund. If the intimation itself has a mistake, you can ask for a rectification on the portal.

How TaxCare helps

TaxCare brings your TDS from Form 26AS or Form 168 and the AIS into one view, compares it with your Form 16, and computes your tax under both regimes so you can see the refund before you file. After you file, it reminds you to e-verify and follows the return through its stages. If your refund is stuck, a Tax Expert can help.

This guide gives general information and is not professional tax advice.