The most common financial document which people come across while filing their income-tax (I-T) returns is the (tax deducted at source) TDS certificate or Form 16 / Form 16A. Every entity that deducts tax at source from you is required to deposit the deducted tax with the I-T department and give you a tax deduction certificate.
In case your salary for the financial year (FY) is more than the basic exemption limit of Rs2,50,000 your employer is required, by the Income-tax Act, to deduct TDS on your salary and deposit it with the I-T department. Form 16 is a salary TDS certificate, where the employer is certifying details regarding the salary you have earned during the year and how much TDS has been deducted.
Form 16A is also a TDS certificate but is applicable for TDS on 'income other than salary'. Form 16A is issued when a bank/ NBFC (non-banking finance company) deducts TDS on interest income earned from fixed deposits or for TDS deducted on insurance commission or for TDS deducted on the rent receipts. From FY20-21, mutual funds and companies have started deducting TDS on dividend income too.
The figures in the TDS certificates should match with those shown in your Form 26AS. In case the figures do not match, this mismatch could give rise to queries from the I-T department. It is extremely important that one checks the Form 26AS to reconcile figures with the TDS certificates. We had earlier written about How to Download your Form 26AS
To check if your Form 26AS is correct, follow following steps:
Step 1. Download the TDS certificates issued to you (Form 16/ Form 16A/ Form 16B) from TRACES portal only.
This is because the TDS certificates one downloads from the TDS Reconciliation Analysis and Correction Enabling System (TRACES) portal are in a specific format.
The form downloaded from TRACES carries a 7-character unique certificate number and it has a TDS- CPS logo on the left side and a national emblem on the right side at the top. This certificate provides all the details of the income paid to you and also the tax deducted from that income by the payer and deposited with the government.
Step 2: Verify the digital signature.
In case of digitally signed certificates, check if the signature is verified, i.e., has a check mark across it. An unverified signature will bear a question mark over the signature instead of the check mark.
Step 3. Check details on the TDS certificate.
Verify that your name, your PAN, the deductor's TAN, the amount paid to you and the TDS amount is correctly mentioned on the TDS certificate. The TDS certificate mentions the FY and assessment year (AY) for which tax is deducted. Most banks and NBFCs issue TDS certificates quarterly and so the quarter for which the tax has been deducted is also mentioned.
Step 5. Double-check and verify if the TDS certificate figures match with figures in Form 26AS.
Compare Form 16 / Form16A/ Form 16B and check if your TDS -as shown in the TDS certificate received from the deductor—has actually been received by the government or not by comparing with your Form 26AS. You should also check if the TDS has been appropriately deducted on every transaction (on which it was supposed to be deducted) by the deductor. If the TDS has been deducted but is not reflecting in your Form 26AS, then this suggests that the tax was deducted on your behalf by the deductor but it has not been deposited with the income tax department yet.
If you spot any discrepancy between the TDS certificates and Form 26AS, inform the deductor rightaway, seek a clarification and get the figures corrected. It is possible that there was an error with your PAN. In case, TDS has not been deducted, you should remind the deductor to deduct tax on your behalf and deposit it with the government.
Form 26AS also includes the advance/ regular/ self-assessment tax paid by you. Tax Refund received by you during the FY also shows up in the Form 26AS. Similarly details of your transactions in mutual funds, shares and bonds [as reported by AIR (Annual Information Return) filer] and TDS defaults related to processing of statements also reflect in the Form 26AS.
In case, TDS deducted on your behalf or paid by you in your return is not reflected in the Form 26AS then you could get a notice from the income tax department when it processes your tax return.
The whole idea behind introducing Form 26AS is to enable the taxpayer to confirm and verify the details mentioned in TDS certificates with those mentioned in Form 26AS and get discrepancies (if any) corrected. TDS certificates are key because these certificates and the Form 26AS are a cross check for each other.
If there is a mismatch, you should try to get it corrected. In the absence of TDS certificates, you would be unable to discover a mismatch. In case your return gets selected for scrutiny then you are likely to need your TDS certificates to show to the IT department. In case, TDS deducted on your behalf is not reflecting in the Form 26AS then too you would require the certificate to prove that tax was actually deducted by the individual/ entity.
In case of salaried individuals, Form 26AS in itself is not enough to file the return since it does not share the detailed breakup of your income and details of deductions claimed under section 80C to 80U which are presented in Form 16.
It is extremely important to share your PAN with the deductor.
As taxpayers/ assesses, we must provide our PAN to the deductor or else the deductor will deduct TDS at a higher rate (20%). If PAN is not provided, the TDS will also not reflect in your Form 26AS which is linked to your PAN.
This is because the deductor will not know which PAN to assign the TDS to while uploading data in the income tax site. Hence even if excess tax has been collected on your behalf, you would not be able to claim a refund on this portion of TDS unless you share your correct PAN with the deductor.
It often takes time for your TDS / tax paid details to reflect in Form 26AS.
There is often a time-lag for your TDS/ tax paid by you to reflect on Form 26AS. This normally happens as the deadline for deductors to file their TDS returns approaches. Since there is a lot of TDS data being uploaded into Form 26AS , it leads to time-lag due to the time taken to update Form 26AS.