To avoid tax notices, it is crucial to correct any errors in your TDS/TCS statements now, as a significant change in the law is reducing the deadline. The Income Tax Department has published an advisory indicating that the submission of TDS and TCS correction statements for the period from Q4 of FY 2018-19 through Q3 of FY 2023-24 must be completed by March 31, 2026. Should there be any inaccuracies in TDS deductions made by your bank, employer, property buyer, or others, or if the correct TDS amount was deposited with incorrect details in the challan, it is crucial to request a correction by the deadline. After March 31, 2026, you will forfeit your TDS credit and may be obligated to pay the tax again, potentially leading to a tax notice if liabilities remain unsettled.
What did the Income Tax Department state regarding the TDS correction statement?
According to the official advisory from the Income Tax Department:
- The Income Tax Act of 1961 will be repealed effective April 1, 2026, in accordance with section 536 of the Income Tax Act 2025.
- Section 397(3)(f) of the Income Tax Act 2025 states that a deductor or collector may submit a correction statement in a prescribed format and manner to the designated authority within two years from the conclusion of the tax year pertaining to the needed statement, as specified in the aforementioned clauses or under section 200 of the repealed Income Tax Act of 1961.
- Therefore, correction statements for FY 2018-19 (Qtr. 4), FY 2019-20 through FY 2022-23 (Qtr. 1 to Qtr. 4), and FY 2023-24 (Qtr. 1 to Qtr. 3) will be accepted only until March 31, 2026. After this date, they will be time-barred, and no submissions will be taken after April 1, 2026.
- All Deductors, Collectors, and relevant stakeholders should take note of this information and ensure that any necessary corrections for the specified timeframe are completed on time, since filings made for this period will be subject to limitation after March 31, 2026.
Implications for taxpayers
Chartered Accountant Ashish Niraj, Partner at A S N & Company, explains that each TDS deductor is obligated to submit a TDS statement, and mistakes in filed TDS Returns often necessitate corrections via a correction statement. He notes that with the introduction of the Income Tax Act 2025, Section 200 of the previous act has been replaced by Section 397(3)(f).
Chartered Accountant Ashish Karundia points out that starting April 1, 2026, the window for revising TDS and TCS statements under the Income Tax Act 2025 will be shortened from six years to two years.
Karundia further explains that the previous six-year allowance facilitated significant retrospective changes, often contributing to delays in resolving discrepancies in tax credits. With the new regulations concerning TDS, any inaccuracies in TDS/TCS filings will now require more immediate correction, thus enhancing transparency and administrative efficiency.
Karundia also emphasizes the effects of this amendment on the filing of Income Tax Returns, particularly ITR-U, which remains accessible for four years.
According to Karundia, “Due to the reduced timeframe for corrections, any issues surrounding incorrect or non-deposit of TDS/TCS flagged by the Central Processing Centre (CPC) can lead to demand notices if discrepancies are not rectified in time. Consequently, both deductors and deductees need to be particularly vigilant in maintaining compliance within the new statutory timelines to avoid negative outcomes such as delayed refunds, unresolved tax credit issues, or additional tax obligations.”
Karundia advises that TDS or TCS deductors, collectors, and deductees should review any tax demands associated with transactions up to December 2023 and take appropriate corrective measures by March 31, 2026.