Received Income Tax Notice For Mismatch In Income With Form 26AS

Received Income Tax Notice For Mismatch In Income With Form 26AS

What is form 26AS?

It is a consolidated Annual Information Statement for a particular Financial Year (FY). It contains the details of the following:

  • Tax Deducted at Source (TDS)
  • Tax Collected at Source (TCS)
  • Advance Tax / Self-Assessment Tax / Regular Assessment Tax deposited
  • Refund received during a financial year (if any)
  • Details of any Specified Financial Transactions (SFT) (if any)
  • Details of Tax Deducted on sale of immovable property u/s194IA (in case of the seller of such property)
  • TDS Defaults (if any)
  • Information relating to demand and refund
  • Information relating to pending and completed proceedings

Where do you get your Form 26AS?

The primary source of your Form 26AS is the e-Filing portal of the Income Tax in India. Log in with your credentials and invoke the “My Account” tab and select 26AS from the drop-down menu. You will be directed to the TDS Reconciliation Analysis and Correction Enabling System (TRACES) website. Input the relevant AY and the format of the report, and you can view and download your Form 26AS. The facility is also available to all those who use net banking extended by different banks. The process is very simple, and you receive Form 26AS in your registered mail ID seamlessly. However, the source remains the same - TRACES.

Components of Form 26AS:

As already explained, it is a statement of all your tax credits during an FY / AY. It should also contain the details of deductors, including TAN. Check out the various information you can gather from your Form 26AS.

  • Taxes Paid and Refunds: You get to see the taxes you have paid during the year and also the refunds received by you.

  • TDS on Sale of Immovable Property: If you have sold a property during the year, the TDS is deducted by the purchaser.

  • TDS on Rent of Property: If you receive rent over Rs.50K per month, the lessee will deduct TDS, which should be reflected here.

  • TCS on sale of Car: If the purchase price exceeds Rs.10L, you are required to pay 1% of the sale price as tax. The seller will deposit this amount to the Government Treasury.

  • High-Value Transactions: Any high-value transaction in your account in a bank or financial institution is reflected here.

  • Self Assessment Tax: Any advance tax paid by you during the year.

It is thus a summary of all your financial transactions and taxes thereon in the relevant assessment year against your PAN account. Information is updated every quarter. You are eligible to claim only those credits reflected in your Form 26AS while filing your ITR.

Rectification of errors in Form 26AS:

Once you have identified the errors, it is for you to get them rectified appropriately. The primary step is to bring the error or mismatch to the notice of your employer or deductor as the case may be. Your deductor can file a TDS correction statement to the Income Tax Department for rectification of the error.  You can now also explain the reason for the mismatch in the portal in response to the query raised by IT seeking an explanation for the mismatch.

Consequences of Mismatch in Form 26AS:

The basis for detecting the mismatch in Form 26AS is your Form 16 and Form 16A. While you receive your Form 16 from your employer, you are given Form 16A by your bank. In either case, you are in a better position to keep track of your TDS deducted. In case TDS has been deducted and you have not received an equivalent tax credit, you have to make sure that the credit is reflected. In the absence of credit in Form 26AS, even if you claim the amount in your ITR, it will be ignored and you will face demand notice for underpayment of tax. On the other hand, if you are entitled to a refund, it will be reduced to that extent. Thus, your tax credit in Form 26AS becomes the benchmark for the processing of your ITR.  

It may also happen that excess credit has been shown in your account due to some errors on the part of your employer or the deductor. In such a scenario, you should avoid claiming credit for the excess amount to obviate the consequences. The form might at any time be rectified by the deductor by submitting a revised TDS return. If you have claimed credit for the excess amount, you become liable for demand notice.

How to avoid notices?

If you are yet to file your tax return, then do check both Form 26 AS and the AIS before filing the tax return. Do not forget to take into account all the bank accounts for the purpose of savings bank account interest and dividends. Remember, some income would not be taxable, but yet has to be declared in the income tax return.

This is critical in the current year, as there is no additional period for revising returns.
​
As Savla indicates, “If there is a mismatch issue, then this year the tax assessees do not have any option to revise the tax return as the filing due date and the window to revise one’s returns both end on December 31, 2021.”





Created & Posted by Garima 
 article assistant at TAXAJ

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