Form 16/ 16A, which your employer furnishes before filing your taxes for the relevant financial year. It is to be noted that Form 26AS and Form 16/16A should have the same amount deducted as Tax Deducted at Source (TDS). However, there might be inconsistencies in the TDS amount deducted for various reasons, including clerical mistakes.
What is a TDS Statement?
According to the Income Tax Act 1961, Tax Deducted at Source abbreviated as TDS refers to a specific amount of money written off at source by the deductor when the deductee’s source of payment is generated. The amount is then remitted into the account of the Central Government through banks that later upload information regarding TDS into the TIN central system.
tax deductible payments must file quarterly TDS returns as applicable. This statement contains information about people who have received payment after-tax deductions, or in other words, deductees. It also contains the nature of the payment made to him and the tax deducted from his payment.
These are called TDS statements. Based on such statements filed, the deductors generate Form 16 (TDS on salary) and Form 16A (TDS on other income) annually and quarterly respectively.
What is Form 26AS?
Generally, every entity (individual or company) that has deducted taxes must credit that amount to the government via banks. Banks must upload these TDS details into the Tax Information Network (TIN) central system. The deductors, parallely, would file quarterly statements to TIN, providing quarterly TDS details.
Based on these details, the TIN central system matches information related to tax payments before converting it into a comprehensive ledger for the concerned PAN. This is Form 26AS. Basically, the Form 26AS statement provides a consolidated view of the total income earned by you as a deductee from various sources.
It also includes the TDS/ TCS amount that has been deducted from your income and credited to the Income Tax Department. Apart from tax deductions, you may also pay taxes by way of Advance Tax and Self Assessment Tax. All such tax-related information appears in Form 26AS.
What is Form 16, according to the Income Tax Act?
Every detail related to TDS deduction of amount from an individual’s income is recorded in Form 16 Part A and 16A. It stands mandatory for the entity that has deducted any tax at source to issue certified and pre-filled Form 16 annually in either print or in soft copy form. Whereas, Form 16A which provides details of every tax deduction on incomes that do not include an individual’s sustained salary is issued every three months.
Importance of Rectifying Mismatches
The Income Tax department provides a pre-fill service where all data is automatically captured using PAN matching. When Form 26AS is not up to date, taxpayers cannot use the pre-fill facility. Additionally, if there is a mismatch, the IT return will be rejected, and taxpayers will have to respond to the IT notification online and explain the reasons. It may also cause delays in processing returns, thus, delaying tax refunds. The tax return is a vital document. Thus, rectifying mismatches early will help taxpayers file ITR without any hassles.
Reasons for Mismatches between TDS Statement and Form 26AS
- Failure of the deductor to deposit TDS on time
- Incorrect amount entered in the TDS return
- Incorrect PAN quoted in the TDS return
- Mistake in the CIN (Challan identification number)
- The deductor’s PAN/TAN wrongly entered
- Mistake in the chosen Assessment year
- Omissions in the TDS return
- Incomplete details of the assessee in the TDS return
- Mismatch in the TDS quoted and the actual TDS deducted
Rectifying TDS Mismatches
- More often than not, such mismatches can be attributed to wrong information provided in the TDS return. So, please approach your employer/deductor to file a revised TDS return after making the necessary corrections.
- The Income Tax department allows the assessee to mention the reason for the mismatch in the online portal in answer to a Notice sent by the department.
Consequences of TDS Mismatch
Computerized ITR processing income tax returns has made it easier to identify matches in Form 26AS and TDS statements. The income tax portal contains links that would provide access to 26AS, allowing the assessee to verify and cross-check the details. Hence, please ensure that TDS details in TDS statements and Form 26AS match to avoid the following consequences:
- With the prefill facility made available in the website and utilities, all the data available in the 26AS is automatically filled in the ITR. In the event of mismatches, the value prefilled will mismatch with our actual computations.
- Omission of entries by the deductor will result in you not getting credit for taxes actually deducted and this could result in a tax payable situation.
- There will be delay in processing your Income tax return.
- Receipt of refund of excess tax deducted will be delayed.
FAQs
What is the time limit for TDS rectification?
The taxpayer’s application for rectification should be disposed off within 6 months of the end of the month in which the application is received. Where rectification is done on its own, then such rectification can take place up to four years from the end of the FY in which the rectification order is passed.
What to do if Form 26AS is not updated?
Usually, it is the deductor’s responsibility to keep your form 26AS updated with all the deductions. In case your form 26AS is not updated, you should bring it to the notice of the deductor and get it updated as soon as possible. Only the deductor can update your Form 26AS details.