Did you receive a tax notice to pay additional taxes? Rejection of your TDS claim could be the reason; know when it can happen

He tax department will mark your income tax return (ITR) and not allow tax deducted at source (TDS) if you detect any discrepancy in the TDS data reported by you in the ITR and by the TDS deductor. This is because when a TDS deductor deducts the tax, he has to file a TDS return, which the tax department reconciles with the data reported by you. For example, if you invested in FD and the bank deducted Rs 10,000 as TDS, then the bank has to report this transaction in your TDS return. If, for any reason, the bank makes an error in reporting this data, then the income tax department will not allow your TDS Claim and can even issue a tax notice for this.

“It should be noted that a taxpayer will not obtain a tax credit for tax deductions not reflected in Form 26AS,” the income tax department said. This implies that if you owe any tax after filing your ITR, you will have to clear the tax debt because you will not be able to offset TDS Credit that does not appear in Form 26AS.

“Taxpayer information is currently captured in Form 26AS, AIS and TIS to facilitate data verification and ITR filing. In all cases of discrepancy (TDS), the tax department is likely to issue a communication to the taxpayer ” says S Vasudevan, Managing Partner, Lakshmikumaran & Sridharan (LKS).

Why a discrepancy may occur regarding TDS data in your ITR and Form 26AS?

when you income tax return is successfully processed, you will receive a summons order under section 143(1). In this summons order document you can see the calculations presented in the ITR filed and the calculations accepted by the Income Tax department. If the TDS credit claim is rejected, the calculations accepted by the tax department will also change and show higher tax liability.

The income tax department said, “Taxpayers are requested to ensure that the TDS details mentioned in Sch TDS1 and Sch TDS2 of the ITR form are complete and consistent with the details reflected in Form 26AS/ TDS certificate/Form 16 issued by the deductor. Ensure that the The deductor’s TAN is correctly entered in the relevant fields of the ITR form Errors or omissions in your Form 26AS. They can occur due to various reasons, such as:

• Non-filing of TDS returns by the deductor,
• Non-payment of TDS by the deductor,
• Citing incorrect AY or incorrect PAN (or no PAN),
• Incorrect challan details in submitted TDS returns,
• Challan details wrongly quoted in the TDS return by the deductor or in details uploaded by the bank.”

Experts say that if there are typographical errors in the PAN filed by the taxpayer or recorded by the deductor, the TDS may not be reflected correctly. “Errors in data entry such as incorrect amounts or incorrect entries of financial years can cause further discrepancies. Additionally, technical glitches at the department end can also sometimes result in discrepancies between the TDS reported by the deductor and that displayed in AIS or Form 26AS”. says Vishal Gehrana, senior associate at Karanjawala & Co. and a registered advocate at the Supreme Court.

What possible steps can be taken to fix the TDS data discrepancy issue?

Vasudevan of Lakshmikumaran & Sridharan says that if there is a discrepancy, then you need to file a revised ITR or ITR-U (updated ITR) if there is a time limit for doing so. “Where the mismatch arises due to non-disclosure by the taxpayer, it is advisable for the taxpayer to file a revised return or an updated return, as the case may be, to address the mismatch,” it says.

Needless to say, if you manage to correct or update the Form 26AS details with the correct TDS amount, you will surely be able to claim your credit. Experts recommend taking up the matter directly with the TDS deductor concerned. “Where the mismatch arises for any other reason due to non-deposit of tax or incorrect disclosure, it is advisable for such taxpayer to contact the counterparty concerned to correct the mismatch and avoid protracted litigation in this regard. If the mismatch arises due to for other reasons, the taxpayer must give appropriate responses,” says Vasudevan.

Gehrana tells what happens after asking the TDS deductor to make the necessary corrections. “If there is an error on the part of the deductor, he or she must file a correction return or a revised TDS return. It is also crucial for the taxpayer to ensure that the deductor has been provided with the correct PAN, as an incorrect PAN can cause a mismatch After the deductor submits the corrected return, the updated information should be reflected in Form 26AS within a few weeks. In cases where the discrepancy persists even after the deductor has made the corrections, the taxpayer has the option to file an amended return complaint on the e-filing portal of the Income Tax Department to seek assistance,” it says.

“In terms of filing an Income Tax Return (ITR), taxpayers are often unsure whether they should wait for corrections in the TDS data or proceed based on their own records. Generally, it is advisable to file the ITR with correct TDS details as per the taxpayer’s records such as Form 16, Form 16A or TDS certificates Filing based on accurate records ensures that any discrepancies can be cleared later with the Income Tax Department. especially through the rectification process cases where the TDS do not match is significant, taxpayers may consider waiting for the deductor to file a revised return and ensure that both Form 26AS and AIS reflect the corrected data. However, if a taxpayer is facing a filing deadline and the deductor is yet to make the necessary corrections, he or she can file the return with the TDS data available in Form 26AS or AIS. It is important to be prepared for possible scrutiny or notices from tax authorities if the mismatch persists,” says Sujit Bangar, founder of TaxBuddy.com.

The income tax department says that you can take the following actions to correct the details in your Form 26AS:

• “Please provide a correction statement (via NSDL website) only for those records requiring correction.
• In the event of an error made by the deductor (for example, your employer), you must contact the deductor and request that he:
• File TDS return if still pending
• Provide revised TDS return if they filed the return with incorrect/incorrect details or without PAN
• If there is an error made by the bank (e.g. in tax amount, PAN), you must request the bank to rectify it in the challan details uploaded by the bank.