Got income tax demand notice due to errors in Form 26AS, AIS like TCS employees? How taxpayers can respond to it

Many Tata Consultancy Services (TCS) employees received income tax notices due to a mismatch between the TDS credit in their Form 26AS, Annual Information Statement (AIS) and the amount they claimed while filing their income tax return (ITR).

In the case of TCS employees, the company has proactively tried to resolve the tax issues faced by their employees. TCS has communicated to its employees that the tax authorities would be reprocessing their ITRs after which the problem of mismatch of TDS credit would be resolved.

It may happen that you are facing such a scenario where you have also received a tax demand notice from the income tax department due to a mismatch in the TDS amount shown in Form 26AS, AIS, and Part A of Form 16. Here is what you can do if you have got the tax demand notice from the tax department due to mismatch of TDS with Form 26AS and AIS.

Get errors in Form 26AS, AIS corrected

If the Tax Deducted at Source (TDS) amount shown in your Form 26 AS and AIS does not match the amount shown in Part A of Form 16, then one must get the TDS amount corrected in Form 26AS and AIS. Form 16 is the TDS certificate which would have been issued to you by your employer to certify the amount of tax deducted from your salary.
According to chartered accountants, a taxpayer can only claim the amount of TDS which is reflected in Form 26AS. If this amount is less than what is shown in Part A of Form 16, then one must contact the tax deductor to correct it in the TDS return filed by the deductor so that it can be corrected in Form 26AS. The income tax department will only allow credit for the amount of TDS shown in Form 26AS.

How errors will be corrected in Form 26AS, AIS

To correct the error in Form 26AS and AIS you must contact the tax deductor and request them to correct the mismatch in the tax amount.

To get the above correction done, the tax deductor (your employer or any other) will have to file a revised TDS return showing correct details such as the correct tax amount, correct assessment year, correct section for reporting TDS deduction etc. Once the income tax department processes the revised TDS return, the correct details will be updated in your Form 26AS.

However, chartered accountants say that this process can take up to one month. Therefore, it is advisable to check your Form 26AS quarterly and ensure that the correct tax is being deducted and deposited during the financial year. Further, one must match the TDS amount shown in Form 26AS with the TDS certificates you receive before filing ITR.

The income tax department provides a facility to taxpayers to submit feedback if there are errors in their AIS. Feedback regarding any errors/mismatches showing in AIS can be submitted via the income tax e-filing portal.
If the errors are not corrected in the AIS, then it is presumed that the information shown in the AIS is correct.

Reasons for errors in Form 26AS and AIS

According to tax experts, there are several reasons why errors may show up in your Form 26AS and AIS. Some of the common reasons are:
a) Amount of tax deducted from salary is not correctly reported by the employer in the TDS return filed by it
b) TDS deduction reported in the wrong section of the TDS return
c) Wrong amount deposited with the government
d) Wrong PAN given by the employee to the employer
e) Employer or tax deductor mentions wrong PAN while depositing the TDS
f) Quoting wrong assessment year while depositing TDS

AIS can show errors because of reporting of wrong income. This can lead to a tax demand notice from the income tax department. Hence, one must check the information shown in the AIS as well to ensure correct amount of income and other information is reported to the tax department while filing ITR and to avoid any tax notice.

Similar to Form 16, there are other TDS certificates you may receive for TDS on other types of income such as interest or dividend income. In case of errors in 26AS and AIS relating to such types of TDS, a process similar to that mentioned above can be followed with the concerned tax deductor.

What is Form 16, Form 26AS and AIS

Form 16 is a TDS certificate issued to you by your employer. It has two parts – Part A and Part B. Part A shows the tax amount deducted from your salary and deposited (with the government) by the employer against your PAN. Part B shows the details of the total salary income paid by the employer to you and deductions and exemptions claimed by you, if any, depending on the tax regime chosen by you.

On the other hand, Form 26AS and AIS are the documents that inform you about the information that the tax department has. Form 26AS is a statement that contains details of the TDS (Tax deducted at source) from your income and TCS (Tax Collected at Source) from your expenditure and deposited against your PAN. AIS is a more detailed statement containing details of your income and other financial transactions you did during the financial year. It also shows the TDS deducted from the income received, self-assessment tax, and advance tax deposited during the financial year.