Did you receive an Income Tax Demand Notice due to errors in Form 26AS, AIS as TCS Employees? How taxpayers can respond

Many Tata Consulting Services (TCS) employees received income tax notices due to a discrepancy between the TDS credit in their Form 26AS, Annual Information Return (AIS) and the amount they claimed while filing their return. income tax return (ITR).

In the case of TCS employees, the company has proactively tried to resolve the tax issues faced by its employees. TCS has communicated to its employees that the tax authorities would reprocess their tax returns, following which the TDS credit discrepancy issue would be resolved.

It may happen that you are faced with a scenario where you have also received a tax demand notice from Income Tax Department due to discrepancy in TDS amount shown in Form 26AS, AIS and Part A of Form 16. Here is what you can do if you have received the tax demand notice from the tax department due to discrepancy in TDS with Form 26AS and AIS.

Correcting errors in Form 26AS, AIS

If the amount of Tax Deducted at Source (TDS) appearing in your Form 26 AS and AIS does not match the amount appearing in Part A of Form 16, then you need to correct the TDS amount in Form 26AS and AIS. Form 16 is the TDS certificate that would have been issued to you by your employer to certify the amount of tax deducted from your salary.
According to Chartered Accountants, a taxpayer can only claim the amount of TDS that is reflected in Form 26AS. If this amount is less than that shown in Part A of Form 16, then one must contact the tax debtor to correct it in the TDS return filed by the debtor so that it can be corrected in Form 26AS. The income tax department will only allow credit for the amount of TDS shown in Form 26AS.

How errors in Form 26AS, AIS will be corrected

To correct the error in Form 26AS and AIS, you need to contact the tax deductor and request him to correct the discrepancy in the tax amount.

To make the above correction, the tax deductor (your employer or any other) will have to file a revised TDS return showing correct details such as correct tax amount, correct assessment year, correct section to report TDS deduction, etc. Once the revised TDS return is processed by the income tax department, the correct details will be updated in your Form 26AS.

However, chartered accountants say that this process can take up to a month. Therefore, it is advisable to review Form 26AS on a quarterly basis and ensure that the correct tax is deducted and deposited during the financial year. Also, you must match the TDS amount shown in Form 26AS with the TDS certificates you receive before filing your income tax return.

The Income Tax Department offers taxpayers a tool to submit comments if there are errors in their income tax return. Comments on errors or discrepancies shown on the income tax return can be submitted through the Income Tax Return E-Filing Portal.
If the errors in the AIS are not corrected, then the information displayed in the AIS is presumed to be correct.

Reasons for errors in Forms 26AS and AIS

According to tax experts, there are several reasons why errors can appear in Forms 26AS and AIS. Some of the most common reasons are:
a) The amount of tax deducted from the salary is not reported correctly by the employer in the TDS return filed by him.
b) TDS deduction reported in the wrong section of the TDS return
c) Incorrect amount deposited with the government
d) Incorrect PAN given by the worker to the employer
e) Employer or tax deductor mentions wrong PAN while depositing TDS
f) Citing wrong assessment year while depositing TDS

The AIS may show errors due to incorrect reporting of income. This may result in a tax demand notice from the income tax department. Therefore, the information shown in the AIS should also be verified to ensure that the correct amount of income and other information is reported to the tax department while filing the tax return and to avoid any tax demand notice.

Similar to Form 16, there are other TDS certificates that you can receive for TDS on other types of income such as interest or dividends. In case of errors in 26AS and AIS related to such types of TDS, a similar process as mentioned above can be followed with the concerned tax deductor.

What are Forms 16, 26AS and AIS?

Form 16 is a TDS certificate issued to you by your employer. It has two parts: Part A and Part B. Part A shows the amount of tax deducted from your salary and deposited (with the government) by the employer against your PAN. Part B shows the details of the total salary income paid by the employer to you and the deductions and exemptions claimed by you, if any, as per the tax regime you have chosen.

On the other hand, Form 26AS and AIS are the documents that inform you about the information held by the tax department. Form 26AS is a return that contains details of TDS (Tax deducted at source) on your income and TCS (Tax collected at source) on your expenses and deposited against your PAN. AIS is a more detailed return that contains details of your income and other financial transactions you made during the financial year. It also shows the TDS deducted from income received, self-assessment tax and advance tax deposited during the financial year.