CA Pulkit Gupta

On filling income tax return, one of the crucial part is to fill the TDS claim during the relevant financial year which should be match with TDS Credit reflects in Form 26AS.

On non-matching of TDS claimed with TDS credit reflected in Form 26AS, demand will be raised by IT department on processing of return under section 143(1) of Income Tax Act. Further, interest under section 234B & C is also added up in the aforesaid demand.

Usually when the problem of un-matching of TDS with Form 26AS arise?

The TDS credit is reflected in deductee’s Form 26AS, when the respective deductor of TDS filled the TDS return in accordance to section 200(3) of Income Tax Act. Hence, unless TDS deductor didn’t file the accurate TDS return, assessee’s (i.e. deductee) Form 26AS never reflects correct amount of TDS credit which was actually deducted.

Due date

Other common reason for non reflection of TDS credit in Form 26AS are as follows:-

  • Unintentionally/ mistakenly skip PAN of deductee in TDS return.
  • Typological errors while typing PAN of deductee in TDS return.

Non reflection of TDS credit in assessee’s Form 26AS on account of above two problem can be sort out only through revising the TDS return by deductor. Hence, until the deductor will not revise the TDS return the respective deductee cannot claim TDS amount in his Income Tax Return. Even though if he claims non reflected TDS amount, he may face demand later on while serving intimation under section 143(1).

Let understand the problem with the help of illustration:-

Particulars Amount
Assessment Year 2019-20
Assessee Status Individual
Due date of filling IT Return 31st July,2019
Income earned by Assessee 2,00,000/-
TDS deducted by deductor u/s 194A @ 10% 20,000/-
Payment made by deductor to assessee 1,80,000/-

 In aforesaid case let say, deductor made the payment of INR 1,80,000/- after deducting 10% TDS amounting to INR 20,000/- and deductor timely deposit TDS and filled TDS return. However on filling TDS return, deductor made typological errors while typing PAN of deductee in TDS return which will lead to non reflection of TDS of INR 20,000/- in Form 26AS of respective assessee (i.e. deductee).

In the month of filling income tax return (i.e. July) assessee come to know that Form 26AS is not reflecting correct amount of TDS which was actually deducted & cannot able to claim TDS of INR 20,000/- while filling his income tax return.

In this scenario assessee use to approach deductor and practically deductor do not respond expeditiously to address the above problem of deductee. However, deductee has his own deadline for filling income tax return as per section 139(1) of Income Tax Act (i.e. 31st July, 2019). In this hurry situation, deductee has two options while filling income tax return:-

1. File income tax return of INR 2,00,000 in which tax liability will be INR 2,060/- and claim the refund of INR 17,940/- after adjusting TDS of INR 20,000/- which may later on lead to demand of INR 2,060/- if deductor wouldn’t file the revise corrected TDS return.

So effective tax cost may borne by assessee will be INR 22,060/- plus interest. (i.e. 20,000+2,060)

2. Since assessee was received only INR 1,80,000/- after deduction and couldn’t able to claim TDS of INR 20,000/- which was turned into bad debts assessee bonafidely file income tax return of INR 1,80,000/- equivalent to payment received in which tax liability will be NIL in AY 2019-20 and not claim the TDS amount in IT return since it was not reflected in Form 26AS.

In this option, assessee effective tax cost will be INR 20,000/- as a bad debt.

Since the due date of filling Income Tax return coming nearby (i.e. 31st July, 2019) and from another side deductor not taking action expeditiously to correct the mistake & revise the TDS return, deductee generally use to opt the 2nd option to avoid demand on later stage.

Mostly, TRACES issuing the demand for last 8 years on account of short deduction of TDS. One of the reasons for short deduction of TDS is typological errors while typing deductee’s PAN in TDS returns because on reporting invalid/incorrect PAN of deductee, TDS will be deducted at the higher rate of 20% as per section 206AA of income tax act.

In response of the demand raised by TRACES, deductor is revising the last 8 years TDS return which will lead to correction of deductee’s PAN and TDS of INR 20,000/- which was not reflected earlier is now automatically reflecting in Form 26AS of respective deductee.

Since the assessee used to opt aforesaid 2nd option (disclosing income of INR 1,80,000/- at lower side) to avoid the demand u/s 143(1) but now after filling corrected revise TDS return by deductor, Form 26AS of assessee automatically reflects the income of INR 2,00,000/- which will lead to income escape assessment of INR 20,000/- (i.e. 2,00,000 – 1,80,000).

In this situation assessee has left with only alternative of revise his income tax return by showing correct income of INR 2,00,000/- and claim TDS of INR 20,000/-. However, as per section 139(5) of income tax act ITR can be revise maximum upto the end of the relevant assessment year (i.e. 31st March 2020 in above illustration)

Many times the correction in TDS return has been done after expiry of time period of serving intimation u/s 143(1) (i.e. 31st March, 2020) and time period of serving notice u/s 143(2) (i.e. 30th September, 2020), in such situation assessee is left with no choice except waiting for notice issue under section 148 of income escape assessment because time period of revised return has also expired till that time.

In the abovementioned situation, assessee has to face assessment u/s 148 and concealment penalty u/s 270A which is seems harsh to assessee in spite of he was bonafidely filled the income tax return of INR 1,80,000/- since he was received only INR 1,80,000/- after deduction and couldn’t able to claim TDS of INR 20,000/- which was turned into bad debts.

As there is a provision u/s 139(5) for expiry period of filling income tax return and on another side there is no provision for expiry period of filling revise/corrected TDS return, creates the problem for deductee facing income escape assessment & concealment penalty.

Further, even though there is a judgment of Honorable Madras High Court on “TDS credit given to deductee even if deductor has not paid TDS amount to government” in the case of Executors of the Estate of S. Shanmuga Mudaliar Versus ACIT but practically computerize processing of income tax return serve the intimation u/s 143(1) & raise the demand on account of wrongly claim TDS credit because the Form 26AS doesn’t reflect the same TDS credit.

So in a nutshell, there should be a provision in income tax act for expiry period of filling revise/correct TDS return which should align with the expiry period of revise income tax return u/s 139(5) to avoid the above explained situation or make more stringent provision to make the deductor liable instead of deductee in such circumstances.

(Republished with Amendments by Team Taxguru)

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  1. Vivek says:

    Yes I have the idea to avail last 7 years tds refund in current year all who need to contact me on this no.7004263343 ,100%solution


    TDS was deducted by SBI & is reflected in 26AS but none of the FORM-16A of the 4 quarters show any such TDS & depositing it with Govt/IT Department. Can this cause penalty on me? If yes, what should I do to avoid penalty or if I am penalize, how can I recover it from bank? Kindly reply on my mail ID.

  3. T. Omanakuttan Pillai says:

    On maturity of FDs, it is noticed that the bankers had deducted the TDS on February 2012. Unfortunately i did not file the return till date. Is there any possibility file the return now. Please advise
    Omanakuttan Pillai

  4. Asha Tiwari says:

    Filed return for F.Y 2013-14.
    The same has been assessed and refund of TDS deducted on FDs also received.

    On maturity of FDs, it is noticed that the bankers had deducted the TDS but the same has not posted/ deposited to income tax hence did not reflect in 26AS. Hence the credit of the said TDS has not been reflected in return and no refund for said TDS.

    Now on pointing, the banker says that hey will upload the said amount in the said F.Y i.e. 2013-14.

    Whereas my return is already assessed and settled hence as per my information can not file revised return us 139 (5).

    How to get the credit of the said amount and claim refund.

    Guide me.

  5. Amit Singh says:


    I filed my income tax of 2015-16,my previous employer didn’t provide me form 16,so form salary slip information,I filled all details,but my problem is ,after submitting income tax,I checked form 26as,where i didn’t entry of my employer.I spoke and mailed to my previous employer.But no body is giving response to me.What to do,where i have to compliant.

    your response will help me


  6. shailesh mathur says:


    I have not filed my return for the year AY 12-13,13-14. kindly confirm by when i can file my return for these 2 financial years.

    pls reply on my mail id only

    Many Thanks

  7. Adv Sudhir Agrawal says:

    In my some of the clients TDS was credited in so called Form No 26AS but even after that the Assesing Officer was not given credit to assessee. The reason was that the Assessing Officer was unable to seen it in there website. Then what is the importance of Form No 26AS is?
    He said that the he need to complain in codex.


    Dear Sir, we have filed tds returns on the basis of challans on which A.Y was wrong ( i.e F.Y. 2011-2012 A.Y.2012-13 on challan it was mentioned as A.Y.2011-12 ). Now I have to revise the said tds returns by correcting A.Y And F.Y. So please guide me.

  9. gagan wadhwa says:

    just want to enquire-

    1) what to reply in response against online action to taken. for the army person who received demand notice for 800/- against tds mismatch for asy 2014-15 in no refund case.

    2) another case where refund is claimed and u/s 245 notice is received for ass. year 2011-12. refund is hold . the army person has filled itr in that ass. year with no refund and tds is mismatch with 26as.

    pls reply on my mail id only

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