Rectifying mismatch between 26AS, Form 16 crucial before filing returns

Taking excess credit during ITR filing could lead to notice from tax dept

While filing income-tax returns (ITR), begin by checking Form 26AS and comparing it with Form 16. If there are discrepancies in the figures quoted in the two documents, get them corrected to avoid adverse consequences. 

Form 26AS a crucial document.

Says Kapil Rana, founder and chairman, HostBooks: “It is the consolidated annual tax credit statement linked to your permanent account number (PAN), which includes details of tax deducted at source (TDS), tax collected at source, advance and self-assessment tax paid, and refund received.” 

It also includes details of the sale or purchase of immoveable property and mutual funds, cash deposits, and withdrawals from savings accounts, etc.

Compare the two forms  

An employer who has deducted tax under Section 192 from the employee’s salary must issue a TDS certificate to her in Form 16. 

Says Naveen Wadhwa, deputy general manager, Taxmann: “The TDS certificate can be downloaded from TDS Reconciliation Analysis and Correction Enabling System (TRACES). Form 16 contains information on tax deducted. It is prepared on the basis of the TDS statement furnished by the employer.”

Form 26AS also contains information based on the TDS statement furnished by the employer. It contains information on the amount on which tax has been deducted and the tax deducted. 

Says Wadhwa: “Check both these figures while comparing Form 26AS with Form 16.”

According to Vivek Jalan of Tax Connect Advisory Services LLP, a multidisciplinary consulting firm, “Interest on loans given by you, on bank deposits, and on tax refund should also be matched with Form 26AS.”

You could get a notice 

If the taxpayer notices any transaction not related to him, he should approach the person who reported the transaction, quote his PAN, and get it rectified.

If the TDS deductor has failed to deposit this amount into the government’s account or failed to file TDS return, then credit for it will not be reflected in Form 26AS. The taxpayer should ask the deductor to do so at the earliest.

Form 26AS contains a lot of information on the assessee’s financial transactions, so she must reconcile it, and disclose income in her tax returns that is in sync with the income reflected in Form 26AS. 

If there is a mismatch in the PAN or Tax deduction Account Number (TAN) mentioned in Form 26AS and Form 16, the assessee will not be eligible for credit on the tax deducted.

If there is a mismatch in the tax deducted and tax deposited, the assessee will be allowed to take credit only for the amount appearing in Form 26AS. 

If one takes excess credit while filing ITR, they could even get a notice from the income-tax (I-T) department.

Says Gopal Bohra, partner, N.A. Shah Associates: “If a tax return is filed without considering the transactions reported in Form 26AS, the I-T department may issue a notice or grant short credit for TDS if the entire TDS claimed in the return is not reflected in Form 26AS.” 

Adds Archit Gupta, chief executive officer, ClearTax: “The department allows the assessee to state the reason for the mismatch in response to its notice via the portal.”

Investors will get pre-filled ITR forms now. 

Form 26AS data will be filled in these forms. In the event of a mismatch, the pre-filled value will not match the taxpayer’s computations.

Gupta adds: “A mismatch will delay the processing of ITR and the refund of excess tax deducted.”

What you should do

Start ITR filing by cross-checking the information contained in Form 16 with your salary slips and Form 26AS. 

If there is any discrepancy, report it to the employer immediately so that the latter could correct it by filing a revised return and issuing a fresh TDS certificate to you.