Important Advisory on TDS and TCS Correction Statements
The Income Tax Department has issued an advisory declaring that taxpayers can only file TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) correction statements for Q4 of FY 2018-19 to Q3 of FY 2023-24 until March 31, 2026. This means that if any entity—such as a bank, employer, or property buyer—has deducted incorrect TDS or deposited the correct amount with wrong details in the challan, it is imperative to seek a correction by March 31, 2026. Failing to do so will result in losing your TDS credit, and you may have to pay tax again. Not settling your tax liability could lead to receiving a tax notice.
Official Income Tax Advisory Explained
According to the official advisory from the Income Tax Department, the Income Tax Act of 1961 will be repealed effective April 1, 2026, as per section 536 of the Income Tax Act of 2025. Furthermore, Section 397(3)(f) of the Income Tax Act of 2025 states that a deductor or collector may deliver a correction statement to the prescribed authority within two years from the end of the tax year in which such a statement is required, as stipulated under section 200 of the Income Tax Act of 1961.
Consequently, correction statements for FY 2018-19 (Qtr. 4), FY 2019-20 to FY 2022-23 (Qtr. 1 to Qtr. 4), and FY 2023-24 (Qtr. 1 to Qtr. 3) will only be accepted up to March 31, 2026. Any submissions after this date will be considered time-barred, meaning they will not be accepted from April 1, 2026, onwards. Deductors, collectors, and other stakeholders are advised to ensure that all necessary corrections for the aforementioned period are completed on time, as filing beyond this deadline will be barred by limitation.
Implications for Taxpayers
Chartered Accountant Ashish Niraj, Partner at A S N & Company, emphasizes that every TDS deductor is required to furnish a TDS statement. Errors can occur in the TDS returns filed, which may necessitate corrections through a correction statement. Notably, Section 200 of the Income Tax Act of 1961 has been replaced by Section 397(3)(f) of the Income Tax Act of 2025.
Chartered Accountant Ashish Karundia explains that starting April 1, 2026, the allowable time frame for revising TDS and TCS statements under the Income Tax Act of 2025 has been reduced from six years to just two years.
Karundia notes that the previously extended six-year window permitted significant retrospective amendments, which often delayed resolving discrepancies in tax credit filings. The recent amendment in TDS-related laws mandates that any errors or omissions in TDS/TCS filings be addressed more promptly, thus enhancing transparency and administrative efficiency. He also mentions that this change affects the filing of Income Tax Returns, especially ITR-U, which remains available for only four years.
Karundia advises, “Given the reduced correction window, instances of incorrect or non-deposit of TDS/TCS flagged by the Central Processing Centre (CPC) systems may lead to the issuance of demand notices if discrepancies are not resolved within the prescribed period. Therefore, both deductors and deductees should exercise increased diligence in ensuring compliance with the revised statutory timelines to prevent adverse consequences such as delayed refunds, unresolved tax credit issues, or additional tax liabilities.”
In summary, it is highly recommended that TDS or TCS deductors or collectors review any tax demands raised for transactions up to December 2023 and initiate necessary corrective measures before March 31, 2026.
