The government is set to simplify the process of claiming TDS (Tax Deducted at Source) refunds, potentially saving many from the hassle of filing a full income tax return (ITR).
A Simpler Way to Get Your Refund
Currently, even if your income is below the taxable limit, you generally have to file an ITR to get back any TDS that’s been deducted. This often creates an “unfair burden” for small taxpayers, including retirees and those with modest incomes, who might have TDS cut from their interest income or salaries simply because they missed filing certain declarations.
The Select Committee on the Income-Tax Bill, 2025, has heard these concerns and recommended a streamlined approach. The good news? The government has reportedly accepted this key recommendation.
What’s Changing?
Instead of a full ITR, individuals whose income falls below the taxable threshold will soon be able to submit a simplified form to claim their TDS refund. This new form will be directly linked to Form 26AS, which conveniently consolidates all your TDS entries. This change aims to remove the current requirement under Section 263 of the draft bill, which mandates an ITR for refund claims even for those not owing tax.
For example, a salaried person earning ₹12.75 lakh annually might legally owe zero tax under the new regime, but still face deductions unless proper paperwork is filed. This new system would make it much easier for them to get their money back.
When Can We Expect This?
The new Income-Tax law, which will include this amendment, is expected to take effect from April 1, 2026. This move is part of a broader effort by the Select Committee, whose comprehensive report includes hundreds of observations and recommendations aimed at refining the tax legislation.
This proposed change is a significant step towards making the tax system more accessible and less burdensome for low-income taxpayers in India.