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Claim correct amount as credit for tax deducted at source

Let us understand why TDS claimed should match with Form 26AS, and what needs to be done if TDS does not reflect in Form 26AS at all.

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Claim correct amount as credit for tax deducted at source
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For many taxpayers, especially for the salaried, filing of income tax returns, is merely a matter of being compliant with the mandates of law as regards filing return. This is because most salaried taxpayers already have their taxes discharged by way of TDS (tax deducted at source) made by their employers. So, they do not really have any tax to pay at the time of filing of returns. However, what is equally important is that you claim the right amount as credit for taxes deducted at source in the return of income. And what you claim must match with your Form 26AS. Let us understand why TDS claimed should match with Form 26AS, and what needs to be done if TDS does not reflect in Form 26AS at all.

Payment of taxes

Tax laws in India have prescribed a mechanism for taxpayers to pay off their tax dues. These are by way of :

TDS - tax deducted at source by the person making payment to the taxpayer eg. salary, rent, commission, interest etc
Advance tax - In a case where your tax dues after reducing TDS still exceeds Rs 10,000, you will be liable for advance taxes
Self-assessment tax - These are taxes you end up paying in case you realise you still have tax dues at the time of filing return

How is Form 26AS organised and updated

This statement is available for download from your account on the income tax return filing portal. It is a reflection of all incomes that you have received during the year on which taxes have been deducted. It contains details of income and the TDS made thereon. Further, the advance tax and self-assessment tax details also get reflected here. This is a critical document every taxpayer needs to rely on while filing his return of income for considering income to be offered and also for claiming credit of tax deducted.

Every entity that has deducted taxes at source is supposed to deposit such taxes to the credit of the government. This deposit is done through banks. Banks are assigned the responsibility of uploading such TDS details into the Tax Information Network (TIN) central system. Deductors, parallely, are bound to file quarterly statements to TIN providing details of TDS made during every quarter. Basis these details, the TIN central system matches information related to tax payment. Those details that match will be converted into a comprehensive ledger for the concerned PAN, which is nothing but Form 26AS.

How to address discrepancies between Form 16/Form 16A and Form 26AS

Form 16 and Form 16A are generated by deductors and provided to the taxpayer, after the end of a financial year or after every quarter, as the case may be.

These are generated through TRACES ( TDS Reconciliation, Analysis and Correction Enabling System) on the basis of the quarterly returns filed by the deductors. Therefore, there is every chance that information contained in Form 16/Form 16A may not match with entries or even get reflected in Form 26AS as both are generated on the basis of different set of data. Form 26AS being the document that the income tax department would rely on, it is essential that you reconcile Form 16/Form 16A with Form 26AS and get discrepancies resolved before commencing your return filing process.

Here, one may notice that scenarios of missing TDS entries in Form 26AS arise mostly on account of a failure or default on the part of the deductor in filing TDS returns appropriately. Therefore, as stated earlier, it is advisable that every taxpayer matches entries in Form 16/16A with entries in Form 26AS before return filing. Upon coming across any differences that have been discussed above, taxpayer needs to approach the deductor who may carry out necessary corrections by filing a revised TDS return, in order that all details of taxes deducted during the year get correctly reflected in the taxpayer's Form 26AS.

In the event the deductor fails to revise returns despite follow-up by the taxpayer, as a last resort, taxpayer can approach his jurisdictional assessing officer to have this resolved.

The writer is founder and CEO, ClearTax

Reasons for discrepancies:

  • Non filing of quarterly TDS return by the tax deductor
  • Filing of TDS returns with incorrect details of the deductee like PAN, amount deducted etc
  • Filing of TDS returns mentioning the incorrect Challan Identification Number (CIN)
  • Quoting of incorrect Assessment Year
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