TDS, or ‘Tax Deducted at Source,’ plays a very important role in the whole tax system of India, collecting taxes at the point of generation of income. However, a case could arise where the TDS deducted, deposited, and reported in Form 26AS might not match; this will further lead the Income Tax Department to issue a TDS Mismatch Intimation Notice. It is important to understand the reason, consequences, and resolution in case such an intimation is received.
Understanding TDS Mismatch Intimation Notice
A TDS Mismatch Intimation Notice is issued under Section 143(1) or Section 200A of the Income Tax Act when there is a discrepancy between:
- TDS claimed in your Income Tax Return (ITR) and TDS shown in Form 26AS.
- TDS deposited by the deductor and TDS recorded in TRACES (TDS Reconciliation Analysis and Correction Enabling System).
Common Reasons for TDS Mismatch
- Incorrect PAN quoted by the deductor – If the wrong PAN (Permanent Account Number) is used while deducting TDS, the credit will not reflect in your Form 26AS.
- Mismatch in TDS details between Form 16/16A and Form 26AS – Errors in TDS certificates issued by employers or deductors can lead to discrepancies.
- Late filing of TDS returns by the deductor – If the TDS return (Form 24Q/26Q) is filed late or incorrectly, it won’t reflect in Form 26AS.
- Errors in TDS amount claimed – If the TDS amount claimed in the ITR does not match with Form 26AS, a mismatch occurs.
- Deductor not depositing TDS with the government – Some entities deduct TDS but fail to deposit it, causing a mismatch in tax credit.
- Wrong assessment year selected in ITR – Claiming TDS for the wrong assessment year results in discrepancies.
- Multiple Form 26AS entries for the same income – If the same income is reported twice, it can lead to mismatches.
Steps to Resolve TDS Mismatch Notice
Step 1: Verify Form 26AS and TDS Certificates
- Log in to the Income Tax e-Filing portal.
- Download Form 26AS and match the TDS details with Form 16/16A.
Step 2: Compare ITR with Form 26AS
- Check the TDS amount claimed in the ITR and ensure it matches Form 26AS.
- If there’s an error in ITR, file a Revised Return under Section 139(5).
Step 3: Contact the Deductor
- If TDS is not reflecting in Form 26AS, contact the employer/bank/organization and ask them to:
- File a corrected TDS return.
- Verify the PAN details submitted in the TDS return.
Step 4: Submit a Grievance on TRACES Portal
- If the deductor fails to update the TDS details, raise a grievance on TRACES (www.tdscpc.gov.in).
- Select “Request for Resolution” and provide necessary details.
Step 5: Respond to the TDS Mismatch Notice Online
- Log in to the Income Tax e-Filing portal.
- Under ‘Pending Actions’, select ‘e-Proceedings’.
- Submit a response along with supporting documents like Form 16, Form 16A, and Form 26AS.
Step 6: File a Rectification Request (If Needed)
- If a wrong intimation notice is issued under Section 143(1), file a rectification request under Section 154.
- Log in to the Income Tax e-Filing portal, go to “Services” → “Rectification Request”, and submit details.
Step 7: Pay Additional Tax (If Required)
- If the TDS is genuinely underreported or not deducted, pay the differential tax amount with interest under Section 234B/234C.
Step 8: Track the Resolution Status
- After submitting a response, track the status under ‘Response to Outstanding Demand’ in the Income Tax portal.
Preventive Measures to Avoid TDS Mismatch
- Always verify Form 26AS before filing ITR.
- Ensure that the PAN provided to deductors is correct.
- Cross-check TDS details in Form 16/16A with Form 26AS.
- If discrepancies arise, ask the deductor to rectify them before filing your ITR.
- Keep records of TDS certificates, salary slips, and tax payments for reference.
Conclusion
A TDS Mismatch Intimation Notice can be stressful, but timely action can prevent tax penalties. Always cross-check Form 26AS before Online ITR Filing, communicate with your deductor, and respond to the notice promptly. By following the steps outlined, you can ensure a smooth resolution and avoid unnecessary tax disputes.
FAQs
1. What is a TDS Mismatch Intimation Notice?
A TDS Mismatch Intimation Notice is issued when the TDS claimed in an Income Tax Return does not match with Form 26AS records maintained by the tax department.
2. How do I check if I have received a TDS Mismatch Notice?
You can check the notice on the Income Tax e-Filing portal under “Pending Actions” → “e-Proceedings”, or it will be sent to your registered email.
3. What should I do if my employer/deductor has not deposited TDS?
Contact the deductor and request them to file a corrected TDS return. If they fail, raise a complaint on the TRACES portal or inform the Income Tax Department.
4. Can I claim TDS if it is not reflected in Form 26AS?
No, the Income Tax Department only allows TDS claims that are reflected in Form 26AS. If it’s missing, ask the deductor to rectify it.
5. How can I rectify a wrong TDS claim in my ITR?
You can file a revised ITR under Section 139(5) with correct TDS details or file a rectification request under Section 154 if a mismatch notice is received.
6. What happens if I ignore a TDS Mismatch Notice?
Ignoring the notice may lead to demand for additional tax, interest under Sections 234B/234C, or even penalties for incorrect tax claims.
7. How long does it take to resolve a TDS mismatch issue?
Resolution can take 15-60 days, depending on the complexity and response from the deductor and Income Tax Department.
8. What if my deductor refuses to correct the TDS entry?
You can file a complaint on the TRACES portal, submit a grievance on the Income Tax e-Filing portal, or inform the Assessing Officer for assistance.
9. Can I manually adjust TDS in Form 26AS?
No, Form 26AS is auto-populated based on deductor filings. Only the deductor can correct errors through revised TDS returns.
10. What is the deadline to respond to a TDS Mismatch Notice?
You must respond within 30 days of receiving the notice to avoid further action or additional tax liability.
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