What is Tax Deducted at Source (TDS)?

According to the Income Tax Act 1961, Tax Deducted at Source abbreviated as TDS refers to a specific amount of money written off at source by the deductor when the deductee's source of payment is generated. The amount is then remitted into the account of the Central Government through banks that later upload information regarding TDS into the TIN central system.

What is Form 16, according to the Income Tax Act?

Every detail related to TDS deduction of amount from an individual's income is recorded in Form 16 Part A and 16A. It stands mandatory for the entity that has deducted any tax at source to issue certified and pre-filled Form 16 annually in either print or in soft copy form. Whereas, Form 16A which provides details of every tax deduction on incomes that do not include an individual's sustained salary is issued every three months.

What is form 26AS under the income tax act?

Form 16 also called as salary certificate, is issued to the employee under Section 203 of the ITA. This document contains PAN and TAN details of the deductor, PAN details of the deductee, payment acknowledgement number Form 16A is applicable for TDS on non-salary earnings contain information such as TDS payment number, date of the deposit made, the total tax amount deposited and the PAN and TAN of both the parties. The significant difference between the two documents is that all details present in Form 16A are available in Form 26AS whereas only the TDS details of Form 16 are available in Form 26AS. These forms are tremendously vital for the taxpayers especially when it comes to filing income tax returns. The records details of tax deducted and collected at source, advanced tax paid, self-assessed tax, and details of Annual Information Return (AIR) transactions can be traced through Form 26AS. This tax credit statement is of utmost value as it brings to light the exact amount paid to the Income-tax Department either by yourself or through other taxpayers. The information present in this capsule of consolidated tax statement is specific to the individual's Permanent Account Number (PAN).

These important forms can be downloaded through registration and further logging into the Trade Control and Expert System (TRACES) website.

How to resolve mismatches between the TDS statement and Form 26AS?

Now, there are instances where the information provided in the TDS statement and thereupon in form 16 or 16A does not coincide. There are other occurrences where the mismatches are spotted in the TDS statement and Form 26AS.

This could be due to innumerable fallacies some of which are listed as follows. The most common reason is the wrong entry of the deductor's PAN/TAN. Delay in the deposit of TDS by the deductor, negligence in return statement form, incorrect entry of assessment year or challan identification number (CIN), and incorrect PAN and incomplete details of assessee are entered are some of the frequently seen reasons. Not very often, but mismatches in the TDS quoted and the actual tax deducted can also be a reason.

The primary step to be taken in resolving any issue attributing to an error in any of the forms is by approaching the deductor and requesting to file a fresh and a revised TDS return free of any syntax errors. Along with the correction statement to the Income Tax Department, the deductor is required to attach the reason for the discrepancy in the form for the It department. Depending on the reason, the IT holds the power to whether or not impose a penalty on the mentioned discrepancy. Certificates that are not downloaded directly from the TRACES portal will hold no value whatsoever and stands as yet another reason for the delay in filing the ITR. These certificates are in a particular format and it is mandatory according to the Income Tax Act 1961 to stick to it. Any certificate with the same format but not downloaded from the TRACES portal will also be counted invalid.

The online portal of the income tax has in it multiple links that provide access to 26AS permitting the assessee to verify and cross-check the details. This process can take longer and be tiring but nevertheless, computerization of this process has made it nothing but a piece of cake.

It falls into the responsibility of the deductor to check for inconsistencies before filing them. This pushes way to hassle-free processing of your returns and saving you of any future complications and the time involved in the rectification process regarding the same.

Once the mistakes are rectified, filing the Revised TDS tax return takes a fair amount of time. After submitting the Revised TDS tax return, the files do not get uploaded instantly. This again takes a considerable amount of time to get updated on the website. One is required to wait patiently for the files to be processed and updated before filing any further complaints.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.