The ITR that you file is only as good as the source from which you update the data. Ensuring that the source data is correct is essential before starting the e-filing process. This includes the tax credit statement form 26AS.
What is Form 26AS?
Form 26AS is basically a consolidated tax credit statement that has all the details of various taxes deducted on your income at source. Form 26AS is the tax passbook which enlists the detail of taxes deposited on account of taxpayer during the financial year. These taxes can be in form of TDS (tax deducted at source), TCS (tax collected at source), advance - tax and self-assessment tax. You can access Form 26AS from the tax department’s website. Some banks also provide access to Form 26AS for their account holders.
Why checking Form 26AS is important before filing income tax returns (ITR)?
A taxpayer should ensure that the income tax return or ITR is in sync with Form 26AS. Besides that, there are a few transactions which are required to be reported by the banks or financial institutions to the Income Tax Department. For example, deposit of cash in bank account, buying a house property, etc. These financial transactions are reported in ‘Statement of Financial Transaction’ (‘SFT’) only when they cross the threshold limit. These transactions also appear in Form 26AS under AIR (Annual Information Return) column.
What happens if there is a mismatch?
If there is a mismatch in the amount of TDS claimed in income tax return and the amount of TDS appearing in Form 26AS, the assessing officer will provide credit only for that amount which appears in Form 26AS. In this case, the taxpayer shall be issued a demand notice requiring him to deposit the tax equivalent to mismatch in the amount of TDS. However, if tax is refundable to him/her, it shall be reduced by the amount of TDS wrongly claimed in the ITR.
Reasons for Mismatch
Thus, in such situation, a taxpayer should contact the tax deductor to rectify the discrepancies found in Form 26AS.
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