Reasons for Mismatches between TDS Statement and Form 26AS
There are various occasions where the TDS information in the TDS statement and consequently in Form 16 or 16A may differ from what is available in Form 26AS. The most common reasons for such mismatch(es) are listed below:
- 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.
Received a TDS mismatch notice? It could be an error—here’s how to resolve it. Tech professional Samir (name changed) was shocked to receive a tax demand of about ₹1.98 lakh related to his income tax return (ITR) filed for the assessment year 2024-25.
According to the intimation 143(1) sent to him, the tax deducted at source or TDS on his salary reported in his form 26AS is higher than the actual TDS credited to the tax department.
“The intimation says about ₹1.76 lakh is the outstanding TDS I’m required to pay. On top of it, the department has levied interest of about ₹22,000,” he said on condition of anonymity.
This taxpayer is not a standalone case, as several of his colleagues have received similar intimations. Four chartered accountants to confirmed that some of their clients, too, have received TDS mismatch intimations demanding additional tax.
Intimation sent to another taxpayer a tax demand of ₹2.14 lakh. “My form 16 is showing TDS of ₹9.39 lakh, whereas the intimation says their (IT department) records show ₹7.24 lakh TDS, which is resulting in this mismatch,” the assessee said on the condition of anonymity.
What’s the issue
It could be a case of erroneous tax notices as the source of TDS information in Form 26AS and tax department’s records is the same.
“Information in the Form 26AS as well the IT department’s record is based on the details reported by employers or other TDS deductors. The information should be the same at both the places, which is strangely not the case in these cases. “It should be noted that in all these mismatch intimations the TDS with the tax department is lower than what is available in Form 26AS.
In some cases, the TDS deductor files a rectification to the TDS return they have filed after July, due to which the corresponding information in the deductee’s Form 26AS gets updated and this also leads to mismatch when the ITR is processed. However, this doesn’t seem to be the case with the intimations being sent in the last two days as information in Form 26AS is still the same.
The ITRs filed by taxpayers are processed by the tax system and the 143(1) intimations are sent automatically in case of any mismatch. These are not processed by tax officers manually. Since these intimations have been sent out in bulk, it seems like a case of erroneous processing by the IT system.
What to do
When taxpayers receive such a tax demand, they can counter it by filing a rectification request on the IT portal.
However, the rectification filing option on the IT portal has not been functioning since Tuesday, adding to taxpayers’ difficulties. They are unable to submit their request due to a technical error.
The other option is to file an appeal with the Commissioner of Income Tax (Appeals) or CIT(A).
However, in this case, CAs are advising against filing the appeal yet as they expect the IT department to resolve the technical issue. Taxpayers can file an appeal within a month of receiving the intimation.
“Taxpayers have to pay ₹1,000 fee to the tax department, the CAs fee and 20% of the outstanding tax demand in appeal. Instead of bearing these costs right away, I would advise waiting until the end of the one-month appeal filing window as the rectification error will be resolved by then,” said Hegde.
The tax department may reprocess these ITRs once more, as per the communication sent by Tata Consultancy Services (TCS) to its employees, many of whom have received these TDS mismatch notices. Mint has seen the communication TCS sent to its employees.
The company has informed its employees that the tax department will reprocess the ITRs after which the TDS discrepancy is expected to be solved. The company has also advised its employees not to pay additional tax demands yet.
FAQs
How will I know if there is a tax credit mismatch in the ITR?
In case of a TDS mismatch, you will be served a defective notice. It will have the option to correct the TDS details either online or offline. If the defective notice remains unanswered, CPC will process the return by providing partial TDS credit and raise the demand for balance taxes due.
If there is no tax credit mismatch, the message Tax Credit Claimed is Fully Matched with Tax Credit Available in 26AS will be displayed. My Self-Assessment / Advance Tax in my Annual Tax Credit Statement (26AS) do not reflect the amounts deposited by me. What do I need to do now?
You need to validate the Challan number and your PAN in such cases.
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.
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.
How to rectify tax credit mismatch for TDS claim amount?
In case of a mismatch, you may rectify the errors at your end or get them corrected by Tax Deductors by making a correction in TDS Returns/Forms like 24Q, 26Q, 27Q, 27EQ (either by filing a Rectification Request or by filing a Revised Return).
What happens if form 16 and 26AS do not match?
Once you compare the forms and identify the error, you must inform the person responsible for deducting TDS from your income, i.e. your employer. If the reason for the mismatch is a mistake from your employer’s side, it is easier and faster for them to make corrections. The employer has to file a revised TDS Return.
What Steps Should I Take If There’s a Tax Credit Mismatch in My Filed Income Tax Return?
The following steps can be followed to rectify the mismatch:
- Notify Your Employer or Deductor: Inform them of the TDS mismatch, as they must file a revised TDS return.
- Address Other Tax Credit Mismatches: If no intimation under Section 143(1) is received, you can file a revised return and If you have received an intimation, submit a rectification request.
- Check Challan Details: Ensure you accurately quote the challan details in your Income Tax Return (ITR).
- Understand Tax Credit Limits: Remember that the tax credit claimed in your ITR is limited to the amount shown in your Form 26AS.