Tips to avoid tax woes!

Have you planned to file your income tax return? But, did you check Form 26AS before tax filing? If you haven't verified it, you could be looking at trouble

Photographs: Simon Cunningham/Creative Commons

Nowadays, every taxpayer should check Form 26AS before filing tax returns to ensure that Form 26AS shows correct figures of TDS or taxes paid.

Form 26 AS is also known as Annual Tax Credit Statement which is an important document. It shows the tax credit history of the assessee. It contains all the information about a taxpayer with respect to the tax deducted and deposited with the Government on behalf of taxpayer by the deductor, that is, your company, if you are an employee. However, there are instances where TDS deducted either does not match or reflect in Form 26AS. In such cases, taxpayers need to wait for a longer time for credit of tax refund.

Note: Generally, a tax deductor can be any person responsible for deducting TDS (as specified by Income Tax laws) on following payments.:

Salary
Interest
Payments to contractors
Professional Fees
Rent
Commission
Winnings & Lotteries
Payments for Purchasing Immovable Properties

Following are the most prominent reasons with the suitable course of action:

Form 16 or Form 16A do not match with Form 26 AS or non-reflection of TDS

This is one of the common problems that everyone faces. This is due to mismatch in TDS figures or zero TDS in Form 26AS and following are the factors:

Non-Filing of TDS return by deductor: The deductor is liable to furnish quarterly returns of the TDS. The return contains the name, PAN, TDS deducted, amount paid etc. If the deductor fails to file the TDS return, then your Form 26AS will not show any TDS.

Furnishing of erroneous information in TDS return: If the deductor has filed the TDS return with faulty information such as incorrect PAN, TDS amount, etc., then you will find mismatch of actual TDS figures against Form 26AS.

PAN is not furnished: Very often, people either hesitate to inform their PAN or furnish incorrect PAN to the deductor. As a result, TDS is not reflected in Form 26AS. This is a common scenario in banks where depositors do not provide their PAN and their TDS is deducted when the interest amount crosses Rs 10,000.

Course of action

In such cases you have to:

Contact the deductor to file the TDS return if the deductor has not yet filed or
Request the deductor of TDS to revise the TDS return if the reason of mismatch is due to furnishing of erroneous information or
Provide the correct PAN to the deductor, if the reason for error is due to non-furnishing of PAN by taxpayers

Extra income reflecting in Form 26AS which does not belong to the taxpayer

In some instances you may experience that extra income is reflected on Form 26AS which doesn't belong to you. As the income does not belong to you, so that income will note be reported in ITR. But on the flip side you may also receive a notice from the Income Tax authorities for not disclosing the income in ITR. Hence, to avoid any negative unforeseen circumstances, take corrective course of action without any delay.

Course of action:

In this case you have to:

Contact the concerned person whose TAN or name is reflected in deductor column and communicate the error with a request to revise the TDS return. However, the problem is to locate the contact details of TAN holder. You can log in here (external link) to trace and find out the details of the TAN holder.
If you are unable to trace the details of the TAN holder, then contact your Assessing Officer and intimate in writing that unknown Taxes or Income are reflected in your Form 26 AS to avoid any notice for the concealment of income.

Amount paid or credited shown in Form 26AS does not match with income earned

Some taxpayers report their income in their income tax return from Form 26AS. It creates a lot of confusion among them if they observe that the figure reported in amount paid / credited in Form 26AS does not correspond to the actual income earned. This is due to the TDS return uploaded by deductor in which the deductor reports the amount paid or credited.

Course of action

If you are sure that the amount paid / credited figure in Form 26AS is incorrect, then calculate the actual figure along with proper explanation and evidence. Contact the deductor and explain the logic behind the correct figure that should have been in Form 26AS. Accordingly, request the Deductor to revise the TDS return with correct figures.

Form 26 AS does not show Self-assessment tax / Advance tax

During online payment of Income Tax or while filling the printed copy of challan, you should be very careful to mention the correct assessment year and PAN. If there is even a minor mistake, it will deprive you for claiming the tax credits. Hence, this is the main reason why sometimes Form 26AS does not show self-assessment tax or advance tax.

Course of action

In any case, you have to approach the bank within 7 days of payment and request them to rectify the mistakes, noting the correct PAN / assessment year. You can also confirm with them if they have uploaded the challan at TIN systems and if the payment was through challan. If the minimum duration (7 days) is over, contact your Assessing Officer along with an application to rectify the mistakes with necessary details such as copy of challan etc. to avoid any future complexities.

So check your Form 26AS before tax filing carefully and take necessary course of action if any discrepancies are observed in figures of Form 26AS and actual figures. This will certainly help you to do your taxes smoothly and will reduce the probability of getting unnecessary notices from Income Tax department.