Attention to details is paramount when filing income-tax return (ITR). By mid-June, employees receive Form 16 from their employers.
The first step in filing ITR is to compare Form 26AS with Form 16.
If there are discrepancies in the figures quoted in the two documents, they need to be rectified.
Pratyush Miglani, managing partner, Miglani Verma & Co says, “Discrepancies could invite a notice from the Income-Tax (I-T) Department.”
Understanding Form 26AS
It is an annual statement that contains information such as tax deducted at source (TDS), tax collected at source (TCS), advance tax paid, self-assessment tax paid, refund received on tax paid, and any high-value transactions entered into by the taxpayer.
Deepak Jain, chief executive, TaxManager.in says, “The latest Form 26AS also includes information on specified financial transactions, pending and completed assessment proceedings, tax demands, and refunds.”
This form also includes details of sale or purchase of immovable property and mutual funds, cash deposits and withdrawals from savings accounts, and so on.
Checks you must run
The details reflected in Form 26AS must match the assessee’s own financial records, particularly his Form 16 and Form 16A.
Form 16 is an annual statement from the employer indicating the income, investments, and tax deducted and deposited in a financial year.
Soayib Qureshi, associate partner, PSL Advocates & Solicitors says, “Since Form 16 expressly mentions the tax deducted by the employer, it is essential to verify that the TDS amount matches with the amount being reflected in Form 26AS, since the I-T Department will also do this comparison using the assessee’s PAN number.”
Also compare the TDS amount reflected for interest on deposits with the amount mentioned in Form 16A given by the bank.
Fix errors and mismatches
Discrepancies between Forms 16 and 26AS are common.
Miglani says, “It could occur on account of entry of incorrect amount in TDS returns, delay in deposit of TDS by the deductor, incorrect PAN, incomplete information about the assessee, and so on.”
The taxpayer should approach the deductor and get the mistake rectified.
The tax department’s website says, “If there is a mismatch in TDS, inform the employer or deductor responsible for deducting TDS from your income, who then needs to file a revised TDS return.”
Moiz K Rafique, managing partner, Privy Legal Services LLP, adds, “The deductor can rectify his error by filing a TDS/TCS correction statement.
"Once the revised TDS return is processed, the correct figures will get reflected in Form 26AS.”
If the TDS deductor has not deposited this amount in the government’s account or failed to file the TDS return, the taxpayer should ask the deductor to do so at the earliest.
Failure to deposit TDS on time attracts a penalty.
Aditya Chopra, managing partner, Victoriam Legalis-advocates and solicitors says, “According to Section 234E of the I-T Act, 1961, failure to file TDS/TCS return on or before the due date attracts a late fee of ~200 per day (capped at the TDS amount).”
If there is a mismatch in the PAN or Tax deduction Account Number (TAN) mentioned in Form 26AS and Form 16, the assessee will not get credit for tax deducted.
Similarly, if there is a mismatch in the tax deducted and tax deposited, the assessee will be allowed to take credit only for the amount appearing in Form 26AS.
Nowadays, data in Form 26AS gets automatically filled in the ITR.
In the event of mismatches, the pre-filled value won’t match with the individual’s actual computations.
Such errors could delay the processing of ITR and refund of tax.
File after rectification
To file an error-free ITR, ensure that Form 26AS has been updated. Jain says, “Wait until this has happened, otherwise a mismatch could result in a notice from the I-T authorities.”
The notice is issued under Section 143 of the I-T Act.
Qureshi says, “The notice informs whether the tax paid is less or in excess.
"On receiving it, the assessee should pay the tax difference and consult a chartered accountant or the I-T officer.”
|How to check for mismatches|
In case of Self-Assessment Tax (SAT)/ Advance Tax (AT) not reflecting in Form 26AS, validate the challan number and your PAN
Check for any mismatch between TDS, TCS, or any other challan amounts and the amounts in Form 26AS, in the Tax Credit Mismatch page on the tax portal
If the amounts are different, then the message “There is a mismatch” will be displayed
If there is no tax credit mismatch, the message “Tax credit claimed is fully matched with tax credit available in 26AS” will be displayed
If there is a mismatch, your employer/deductor needs to file a revised TDS return