That time of the year when you have to file your Income Tax Return is here and the first financial document that comes to your mind for filing the return is the (Tax Deducted at Source) TDS certificate. A salaried person looks for Form 16 and others look for Form 16A. Every person/entity that deducts the tax from your source of income is mandatorily required to deposit the tax deducted with the Income Tax department and issue you Form 16 or 16A whichever is applicable after filing the requisite return on their part.
If you are a salaried person and your salary for the financial year (FY) exceeds the basic exemption limit of Rs. 2,50,000 after taking into account all the deductions and exemptions into considerations, then your employer will be required to compute, deduct, and deposit the tax as required by the Income Tax Act. It is the employers' responsibility not only to compute, deduct and deposit the tax but also file its quarterly TDS returns with the Tax Department and issue Form 16 to you after the year-end. This Form 16 can technically be called the TDS certificate, in which the employer certifies the salary earned by you during the financial year and the amount of tax deducted on your salary.
Now comes the other TDS certificate other than Form 16 i.e. Form 16A. It is issued for tax deducted on income other than salary income. Form 16A is issued for TDS deducted on payments made to consultants, professional payments, payment to contractors, payment of rent, interest on term deposits received from banks/NBFCs, payment of commission or brokerage, etc.
In the FY 2020-21 TDS on dividend payments by companies and by Mutual Fund on dividend paid, has also come into force.
Now to cross-check as to the correctness of Form 26AS, the figures as appearing in the TDS certificates (Form 16/16A) should match with it Form 26AS.
If there happens to be a mismatch in the figure, then a notice/intimation from the Income Tax Department is certain. One must minutely verify whether the figures in Form 26AS corresponds with the TDS certificates.
Follow the given steps to check if Form 26AS is correct
Step 1. Arrange all the TDS certificates issued against your PAN (Form 16/From 16A/Form 16B) from the deductors (employer/banks/client/company/mutual fund)
Make sure to get all the TDS certificates at one place and also check that they are provided to you after downloading from the TRACES (TDS Reconciliation Analysis and Correction Enabling System) portal as they are in a specific format.
TDS certificate issued from the TRACES portal carries a unique 7-character identifier and a TDS- CPS logo on the top left corner and a national emblem on the right top corner. It contains the details of income received by you during the year and the tax deducted on the same and deposited to the Government on your PAN number.
Step 2: Digital signature affixed to the certificate should be verified.
The certificates are required to be signed digitally for security purposes. One must verify the digital signatures by clicking on it. See the attached image. A verified digitally signed certificate will have a checkmark across it. If the signature is unverified then it will bear a question mark over the signature. If there is a red cross mark, then it means the certificate has expired and you must cross-check the same with the issuer of TDS certificate.
Step 3. Verify the details of the TDS certificate issued to you.
Ensure that the certificate has the following accurately:
Step 4. Always download the latest Form 26AS from the TRACES portal.
You must download the latest version of Form 26AS to avoid any mismatch due to any update by the deductor after an issue of the TDS certificate to you. Sometimes a correction return is filed by the deductor to amend or add some details and that can cause an update to your details also. So, if you refer to an old Form 26AS downloaded earlier then, a possibility of mismatch with TDS certificates issued may creep in.
Step 5. Verify the TDS certificate figures with Form 26AS figures twice, and see if they match exactly.
When in possession of Form 16/16A/16B from all the deductors, check if the TDS as shown in the Form reflects in Form 26AS, to confirm its deposition with the Government.
Form 16 and Form 26AS will contain every detail of transactions on which the TDS was deducted and hence each entry can be cross tallied for accuracy.
If it happens, that, TDS is deducted on any transaction and for the payment is also received but the details do not reflect in Form 26AS then there are 3 possibilities.
If you happen to find any discrepancy or your TDS details completely missing from Form 26AS then you must immediately get in touch with the deductor to make the necessary changes in his TDS return and file a correction return, so that you may get credit for the tax deducted out of your income.
Form 26AS happens to include more details relating to the tax paid in advance/ regular/ self-assessment tax. Tax Refund received during the FY is also there in the Form 26AS. Also, details relating to your transactions in mutual funds, shares and bonds are there as they are reported by AIR (Annual Information Return) filer, viz. banks.
In case the TDS claimed by you in your tax return based on Form 16/16A does not match with Form 26AS, then an intimation from the tax department is imminent.
The logic behind introducing Form 26AS facility was to enable the taxpayer to verify the tax details as mentioned in his Form 16/16A, and if in case of any mismatch or discrepancy same can be intimated to the deductor to make the necessary changes to their TDS return.
If you find a mismatch, you must ask the deductor to correct the same without fail. In the very first step, you were supposed to gather all the TDS certificates issued against your PAN, and if you do not have all of them then, in case of any difference with Form 26AS will not be discovered. In an extreme situation, if your return gets selected for scrutiny then the IT department may ask you to furnish the TDS certificates. Even in the case where TDS deducted on your behalf is not reflecting in Form 26AS then again, you would be in a fix and would need to produce TDS certificate to prove that the tax was deducted by the entity from where you have received the income.
In case of salaried class individuals, the tax amount reflecting in 26AS must match exactly with Form 16 before they proceed with tax return preparation. Form 26AS serves as a good reference to check the total tax deducted but is not a complete reference for filing of the tax return. A Salaried individual will still need complete Form 16 comprising of Part A and Part B, with Part A containing details of tax deducted and deposited and Part B containing detailed breakup of your salary components and also the deductions claimed under Section 80C to 80U.
Sharing your PAN with the deductor is of utmost importance
In case a taxpayer fails to share his PAN with the deductor, then TDS deducted will be at a higher rate i.e. 20%. In case PAN Is not provided then the credit of tax deducted on your behalf will not even reflect in Form 26AS as the same is linked with your PAN. Also to note, Form 16 will not be issued in your name, in case of failure to furnish PAN to the deductor.
Such a case will happen because the deductor assigns the PAN with the TDS amount along with transaction details at the time of filing the TDS return with the IT department. Therefore, the excess tax that has been collected on your behalf, will not be refunded to you until and unless you share your correct PAN with the deductor and that too before the filing of TDS return. Sharing your PAN details with the deductor later may delay the process of refund of excess TDS deducted.
Tax deducted/paid against your PAN takes a time to reflect in Form 26AS
The tax deducted and deposited against your PAN, as well as the self-assessment tax paid by you will take a little bit of time before it reflects in Form 26AS. This normally happens because the TDS deducted goes through a series of processes before it finally appears in your Form 26AS.
A simple process chain is like this:
Tax deducted on a particular date – deposited in next month on or before 7th – TDS return filed after 3 months or a quarter – return gets processed at TDS CPC – Final credit to Form 26AS.
To get the correct credit of TDS one must disclose his correct PAN to the deductor (provide a xerox copy) and to avoid getting any notice from the Tax department, one must verify the tax deposited to the credit of his PAN every 3 months with Form 26AS. In case of any discrepancy or mismatch or non-credit of tax, approaching the deductor is must, to get the correct tax credit. This way last moment delay and inconvenience can be avoided at the time of filing the tax return.
More articles: Income Tax
Form 26 AS is a very important data sheet in IT return process. Generally by May month end it is updated by the concerned banks and other agencies and one should refer it to only after that otherwise if some more data is added to it then one will have to fill the revised return which is a big hassle by itself. So one should wait for all the expected entries in it. Another important thing is that whatever is mentioned in 26 AS, the tax department takes cognisance of that only and tax would be calculated as per that data set.