The Ultimate Source of Truth
When filing your taxes, you have two key documents showing your tax deductions: 1. Form 16: Issued by your employer, showing what they say they deducted. 2. Form 26AS: Issued by the government, showing what they actually received against your PAN.
In a perfect world, the TDS amount in Form 16 Part A matches Form 26AS exactly. But what happens when Form 16 shows ₹1,00,000 deducted, but 26AS only shows ₹80,000?
Why Mismatches Happen
Discrepancies usually occur due to employer errors: - Late Filing: The employer deposited the tax but hasn't filed their quarterly TDS return yet. - PAN Error: The employer filed the return but made a typo in your PAN, so the credit went to someone else. - Default: The employer deducted the money from your salary but never deposited it with the government.
The Golden Rule of TDS
You can only claim credit for the TDS that appears in your Form 26AS.
If you claim ₹1,00,000 in your ITR based on your Form 16, but 26AS only shows ₹80,000, the income tax portal's automated system will immediately flag the mismatch. Your return will be processed with a tax demand notice for the missing ₹20,000 plus interest.
TDS credit is allowed only to the extent it appears in Form 26AS; Form 26AS is the credit shown against your PAN. Source: Income Tax Act Section 199 read with Rule 37BA.
How to Fix the Mismatch
Do not file your ITR until the mismatch is resolved. Follow these steps:
- Contact Your Employer: Immediately notify your HR or finance department. Provide them with your Form 26AS showing the missing credit.
- Request a Revised Return: If they made a PAN error or missed a quarter, they must file a "Revised TDS Return" to correct the mistake.
- Wait for the Update: Once the employer files the correction, it takes 7-10 days for the TRACES portal to update your Form 26AS.
- File Your ITR: Only proceed with filing once the correct amount reflects in your 26AS.
What If the Employer Refuses to Fix It?
If the employer has shut down or refuses to deposit the tax, you are in a tough spot. CBDT circulars state that the department cannot demand tax from the employee if the employer deducted it but failed to deposit it.
However, proving this requires responding to notices with payslips and bank statements. You will need a Chartered Accountant to help you navigate this legal dispute.
What you should do
- Compare Form 16 Part A TDS with your Form 26AS line by line before filing
- If amounts differ, ask payroll to file a revised TDS return to fix it
- Wait for 26AS to update (usually 7 to 10 days) before submitting
- Claim only the TDS that actually appears in 26AS
Common mistake
Claiming the Form 16 figure when 26AS shows less. The portal trusts 26AS, so the gap becomes a demand with interest. Fix the source first, then file.
To avoid surprises, always verify your TDS early. Upload your Form 16 to LastMinute ITR and cross-check the extracted TDS against your downloaded 26AS before proceeding.