InvestorQ : How does an individual end up paying extra income tax?
priya Shah made post

How does an individual end up paying extra income tax?

Answer
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Pratik vyas answered.
1 year ago


An individual’s tax is cut from his/her salary in the form of tax deducted at source (TDS). This is the tax amount the individual’s employer cuts before paying the individual his/her salary and pays it to the government.

Depending on the investment declarations provided by the individual, the company calculates the individual’s tax liability and accordingly deducts TDS every month before paying the individual his/her salary.

An individual could make more investments over the course of the year and hence, his/her tax liability could decrease. In such a situation, when the individual avails more deductions, then the excess TDS amount, that was deducted from his/her salary, is refunded to him/her via income tax refund. For this purpose, the individual has to file the Income Tax Return (ITR).

However, TDS through salary is not the only way an individual ends up paying higher taxes. TDS is also deducted on fixed deposits, rather the interest paid on fixed deposits. In this case too, an assessee can get a refund after filing the ITR.