• Notification Date: 22-04-2024
• Notification No: N/A

How to claim TDS Credit that is not Mentioned in Form 26AS?

Tax Deducted at Source (TDS) applies to various income sources, including salaries, business income, property sales, and interest on bank deposits. When a payer deducts TDS from your income, they essentially withhold a portion of your tax liability. This deducted amount is then credited to your tax account and is supposed to be reflected when you file your tax return. 

However, there can be instances where this TDS credit isn’t immediately available in your tax records. This may happen due to numerous reasons like non-deposit of TDS to the Government by the counter party, due to mismatch in details or any other reason. 

Yet, the taxpayer need not lose his sleep. The remedies are available in these cases, and we suggest the following ways and means by which the taxpayers can claim such TDS as per the procedures laid down by the Government. 

How to Reclaim Tax Credit: 

1. Whatever be the reason, an honest taxpayer should not lose his/ her hard-earned money. Section 276B of the Income Tax Act provides that if a person fails to deposit TDS deducted, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months, but which may extend to seven years and with fine. The deductee should approach their Jurisdictional Assessing Officer (JAO) and apply to consider initiation of proceedings under Section 276B against the defaulting deductor. Even if the deductor has committed some errors in filing his TDS return, the deductor shall be triggered to rectify the error if action is initiated by the JAO. 

2. There may be a situation where the TDS Credit is not allowed in the assessment u/s 143(1) by the Government. In such cases, the assessee should simultaneously file rectification application u/s 154 and appeal u/s 246A. The assessee is eligible for both the reliefs simultaneously. 

3. We also confront some cases wherein there might be a situation where the TDS deductor has deducted the TDS in the current financial year (FY) and the deductee has shown the income in the next FY. In such a situation, deductee has to be careful to not avail the TDS Credit in the current FY but carry it forward to the next FY. This carry forward should be done in the Income tax Return (ITR) itself for the current year. In the next year’s ITR, such credit should be availed, being brought forward. 

4. There might be a reverse situation where any income has been included in the ITR furnished by an assessee for the current AY and TDS on such income has been deducted and paid to the Government in a subsequent FY. In such a situation, from October 2023 the assessee can file Form 71 to claim TDS credit. Form No. 71 will get issued electronically under a DSC if ITR is needed to get provided under a digital signature; or through an electronic verification code. 

Need to Re-check TDS Claim: 

A word of caution for the deductees is that one should match the TDS with his/her income statement and should not take all TDS credit without verifying whether the corresponding income is theirs or not. There may be a situation where a deductor by mistake or fraudulently discloses an assesse’s PAN no corresponding to the TDS deducted, when the transaction has not happened with such deductee. In such a case one must deny the TDS Credit in the AIS statement available on the Income Tax Portal. 

Also, taking excess credit can be detrimental to the taxpayer and diligence is required to be maintained while claiming TDS.