May 212018

Modus operandi of 26AS

What is form 26AS?

A taxpayer may pay tax in any of the following forms:

  • Tax Deducted at Source (TDS)
  • Tax Collected at Source (TCS)
  • Advance tax or Self-assessment Tax or Payment of tax on regular assessment.

The Income-tax Department maintains the database of the total tax paid by the taxpayer (i.e., tax credit in the account of a taxpayer).  Form 26AS is an annual statement maintained under Rule 31AB​ of the Incom​e-tax Rules disclosing the details of tax credit in his account as per the database of Income-tax Department. In other words, Form 26AS will reflect the details of tax credit appearing in the Permanent Account Number of the taxpayer as per the database of the Income-tax Department. The tax credit will cover TDS, TCS and tax paid by the taxpayer in other forms like advance tax, Self-Assessment tax, etc.

Income-tax Department will generally allow a taxpayer to claim the credit of taxes as reflected in his Form 26AS.

What to do if discrepancies appear in actual TDS and TDS credit as per form 26AS?

Every person deducting tax at source has to furnish the details of tax deducted by him to the Income-tax Department. The details will cover the name of the deductee, Permanent Account Number of the deductee, amount of tax deducted, amount paid to the deductee, date of payment of TDS to the credit of Government, etc. On the basis of the details of TDS provided by the deductor, the Income-tax Department will update Form 26AS of the deductee.

Many times the actual amount of TDS and TDS credit as appearing in Form 26AS may differ and it may happen that the TDS credit appearing in Form 26AS may be less as compared to actual TDS, this may happen due to reasons like non-furnishing of TDS details to the Income-tax Department by the deductor, deducting the tax in incorrect Permanent Account Number, etc. In such a case the deductee should approach the deductor and request him to take the necessary steps to rectify the discrepancy due to above reasons.

The Income-tax Department updates the TDS details in Form 26AS on basis of details provided by the person deducting the tax (i.e., the deductor), hence, if there is any default on the part of deductor like non -furnishing of TDS details (i.e., TDS return) to the Income-tax Department, deducting the tax in incorrect Permanents Account Number, etc. then Form 26AS will not reflect the actual TDS. In such a case, the taxpayer may not be able to claim the credit of correct TDS. Hence, the taxpayers are advised to confirm the tax credit appearing in Form 26AS and should reconcile the difference, if any.

​If discrepancy is due to deductor , then he may file TDS/TCS correction statement and correct the same.

What precautions should be taken while filing the return of income?

​​Following is the list of few important steps/points/precautions to be kept in mind while filing the return of income:

1) The first and foremost precaution is to file the return of income on or before the due date. Taxpayers should avoid the practice of filing belated return. Following are the consequences of delay in filing the return of income :

  1. ​Loss (other than house property loss) cannot be carried forward.
  2. Levy of interest under section 234A.
  3. Penalty of Rs. 5,000 under section 271F can be levied. [upto Assessment Year 2017-18]
  4. Fee or Rs 5000 under section 234F will be levied if return is furnished on or before 31st December of Assessment Year fee will be Rs. 10,000 in any other case. [Fee shall be levied @ Rs 1000 if total income does not exceed Rs. 5,00,000]
  5. Exemptions / deductions under section 10A​, section 10B, 80-IA, 80-IAB, 80-IB, 80-IC,  80-ID and 80-IE, 80IAC, 80IBA, 80JJA, 80JJAA, 80LA, 80P, 80PA, 80QQB and 80RRB (w.e.f A.Y 2018-19) are not available.​

​​Belated return cannot be revised under section 139(5). However, w.e.f. 01-04-2017, income-tax return for the Assessment Year 2017-18 and onwards filed under section 139(1) or section 139(4) belated return’ can also be revised.

​2) Taxpayer should download Form 26AS and should confirm actual TDS/TCS/Tax paid. If any discrepancy is observed then suitable action should be taken to reconcile it.

3) Compile and carefully study the documents to be used while filing the return of income like bank statement/passbook, interest certificate, investment proofs for which deductions is to be claimed, books of account and balance sheet and P/L A/c (if applicable), etc. No documents are to be attached along with the return of income.

4) The taxpayer should identify the correct return form applicable in his case.

5) Carefully provide all the information in the return form.

6) Confirm the calculation of total income, deductions (if any), interest (if any), tax liability/refund, etc.

7) If any tax is payable as per the return of income, then the same should be paid before filing the return of income, otherwise return would be treated as defective return.

8) Ensure that other details like PAN, address, e-mail address, bank account details, etc., are correct.

9) After filling all the details in the return of income and after confirmation of all the details, one can proceed with filing the return of income.

10) In case return is filed electronically without digital signature and without electronic verification code do not forget to post the acknowledgement of filing the return of income at CPC Bangalore.

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