How to rectify mismatch in details of Form 26AS and Form 16

The last date of ITR filing for FY 2020-21 is nearing, and the salaried individuals may have received Form 16 from their employers. Unless the government further extends the due date of filing returns for salaried people, the taxpayer will have to complete the ITR filing before 30th September 2021. One of the most important documents that the salaried needs to check is the Form 16 issued by their employer. 

It is very important to cross-check the Form 16 details with the Form 26AS. The Form 26AS records information of all the taxes paid by the taxpayer or deducted on behalf of the taxpayer for every financial year separately. It includes Tax Deducted at Source (TDS), Tax Collected at Source (TCS), self-assessment tax, an advance tax against the PAN number. In other words, the details reflected in Form 26AS is the information in possession of the income tax department. The taxpayer can download Form 26AS by logging in to the income tax e-filing portal of the income tax department.

The information in Form 26AS should match with Form 16. One should reconcile the figures in Form 16 issued by the deductor with Form 26AS. If there is any mismatch in information, one should rectify it before filing the income tax return. Otherwise, a mismatch in the information declared in the income tax return and the information available with the income tax department (as reflected in Form 26AS) will result in enquiries from the latter. 

Reasons for mismatch of Form 26AS with Form 16 

There are several reasons due to which there may be a mismatch in Form 26AS and Form 16. Some of them are specified below:

• The deductor not furnishing TDS details, i.e., file TDS return to the income tax department– If the deductor does not file the TDS return, information of such TDS deduction will not be available with the income tax department.
• The deductor failed to deposit the TDS- The deductor may deduct tax but not deposit it to the income tax department. The income tax department does not allow any credit for tax not deposited to the income tax department.
• The deductor quoting wrong assessment year while depositing TDS- If the deductor mentions wrong assessment year in the challan while TDS payment, the TDS amount will reflect in the wrong assessment year cited by the deductor. It will refrain the taxpayer to claim the credit of TDS in the year to which the income relates.
• The deductor quoting the wrong PAN in TDS return- If the deductor quotes the wrong PAN of the taxpayer in the TDS return, no TDS details will reflect in Form 26AS of the taxpayer.
• The deductor provides incorrect challan details in the TDS return– If the deductor mentions incorrect challan details, such as challan identification number (CIN), date of payment, etc., the TDS amount will not reflect in Form 26AS of the taxpayer.

Hence, if the TDS does not reflect in Form 26AS due to such reasons, the income tax department will disallow the TDS credit claimed for the same in the income tax return.

Further, the taxpayer declares his income as per Form 16 in the income tax return. However, there can also be a mismatch in the income details as per Form 16 and Form 26AS. Mismatch in the income figure may raise an inquiry from the income tax department. Hence, one should verify the TDS amount as well as the income details mentioned in Form 26AS.

How to rectify the errors

The taxpayer can rectify these errors mainly from the deductor’s end. The taxpayer has to approach the deductor and correct the mistake to reflect the amount in Form 26AS. The deductor can rectify the errors by filing a TDS/TCS correction statement for mistakes in the TDS return filed by the deductor. Once the revised TDS return is processed, it will reflect in Form 26AS. Note that even after correcting the TDS return, the Form 26AS is not instantly updated. 

Unless the deductor rectifies the errors and the figures correctly reflect in Form 26AS, the taxpayer cannot claim the tax deducted (TDS) credit by the deductor. Further, there will be a delay in the processing of the income tax return.

However, as per the income tax rules and the circulars issued by the Central Board of Direct Taxes (CBDT), all the deductors must generate and download the TDS certificates (Form 16) from the TRACES utility. The TDS certificates downloaded from the TRACES utility are in a specific format. The TDS certificate generated in any other form or manner will be invalid. Hence, to claim the tax credits, the taxpayers should ensure that the Form 16 issued by the deductor is generated from the TRACES portal.

For any clarifications/feedback on the topic, please contact the writer at namita.shah@cleartax.in