If you receive a TDS mismatch notice from the income tax department, SAG Infotech can guide you through the entire process of resolving this error legally.
A technical professional from a reputed company was surprised to obtain a tax demand of approximately Rs 1.98 lakh concerned with his income tax return (ITR) filed for the FY 2023-24.
Income Tax Intimation Under Section 143(1)
As per the intimation under section 143(1) sent to him, the tax deducted at source or TDS on his salary reported in his form 26AS is more compared to the actual TDS credited to the tax department.
The intimation articulates that ₹1.76 lakh is the outstanding TDS I’m required to pay. On top of it, the department has charged interest of about ₹22,000, he expressed on condition of anonymity.
Other than the taxpayers, his colleagues have received similar intimations. Four chartered accountants cited that some of their clients also have obtained the TDS mismatch intimations asking for an additional tax.
Intimation sent to another assessee cited a tax demand of Rs 2.14 lakh. My Form 16 shows a TDS of Rs 9.39 lakh, while the intimation cited their (IT department) records depict Rs 7.24 lakh TDS, resulting in this mismatch, the taxpayer mentioned on the condition of anonymity.
Main Issues in TDS Mismatch Notice
The same case may be of false tax notices as the source of TDS information in Form 26AS and the tax department’s records are identical.
Details in Form 26AS and the IT department’s records are based on the details reported by employers or other TDS deductors. The details must be identical in both places, which is not the case in these matters. It is to be remarked that in all these mismatch intimations, the TDS with the tax department is lower compared to what is available in Form 26AS.
TDS deductor files a rectification to the TDS return they filed post-July from which the related data in Form 26AS of the deductee gets updated and the same is directed to mismatch after processing the ITR. However, it seems that the intimations sent in the last two days have not resulted in any changes to the information in Form 26AS.
Taxpayers’ filed ITRs are processed by the tax system, and 143(1) intimations are automatically sent if there are any mismatches. These intimations are not manually processed by tax officers. Since these intimations have been sent out in bulk, it appears to be a case of incorrect processing by the IT system.
What Do You Need to Do After a Mismatch Notice of TDS?
Taxpayers can counter tax demands by filing a rectification request on the IT portal. However, the filing option for rectification of ITR on the portal has not been functioning since Tuesday, causing difficulties for assessees who are unable to submit their requests due to a technical error.
Filing an appeal with the Commissioner of Income Tax (Appeals) or CIT(A) is the alternate option.
However, in this matter, CAs are recommending against filing the appeal yet, as they anticipate the IT department to resolve the technical issue. Within a month of receiving the intimation, the taxpayers can file an appeal.
The assessees are obligated to pay a Rs 1000 fee to the tax department of the CAs fee along with 20% of the outstanding tax demand in appeal. Rather than taking these expenses, tax experts wish to advise waiting till the end of the one-month appeal filing window so the rectification error would be solved.
The reprocessing of these income tax returns (ITR) can take place by the tax department, according to Tata Consultancy Services (TCS) notification that has been sent to its employees, many of whom have obtained these TDS mismatch notices.
As per the notification of the company to the employees, the tax department will reprocess the ITRs post which the TDS discrepancy is anticipated to get resolved. Also, the company has suggested its employees not pay the other tax demands.
FAQ’s Regarding the TDS Mismatch Notice
Q.1 – What is the way to know if there is a tax credit mismatch in the ITR?
In case of a TDS mismatch, you shall be provided a defective notice. It shall have the choice to rectify the TDS information either online or offline. If the defective notice is not answered, then the CPC will process the return by furnishing the partial TDS credit and raise the demand for the balance tax dues.
Q.2 – What is the time limit for rectification of TDS returns?
In the TDS return the mistakes can be corrected within 6 years from the finish of the fiscal year that the return is pertinent with.
Q.3 – What needs to be done if Form 26AS is not updated?
It is the obligation of the deductor to keep your Form 26AS updated with all the deductions. If your Form 26AS is not updated, then you must bring it to the notice of the deductor and get it updated quickly. Your Form 26AS details can only be updated by the deductor.
Q.4 – What takes place if Form 16 and 26AS do not match?
Once you compare the forms and discover the error, you should notify the person obligated for deducting TDS from your income, i.e. your employer. If the reason for the mismatch is the mistake from your employer’s side, then it is simpler and quicker for them to make the corrections. It is mandated for the employer to file a revised TDS return.
Q.5 – What is the method to correct the tax credit mismatch for the TDS claim amount?
In case of a mismatch, you may correct the errors at your end (by filing a Rectification Request) or get them corrected by Tax Deductors by correcting TDS Returns/Forms like 24Q, 26Q, 27Q, 27EQ.
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