TDS Mismatch Intimation Notice in India

TDS Mismatch Intimation Notice in India – How to Resolve?. TDS, or 'Tax Deducted at Source,' is an important aspect of the Indian taxation system. It ensures the collection of tax at the point of income generation, promoting transparency and timely tax payment. However, discrepancies can occur when the TDS deducted, deposited, and reported in Form 26AS does not match. In such cases, the Income Tax Department may issue a TDS Mismatch Intimation Notice. In this article, we are going to discuss the reasons, consequences, and steps to resolve these notices because it is important to know about these things for avoiding tax disputes and penalties.
TDS Mismatch Intimation Notice
A TDS Mismatch Intimation Notice is issued under Section 143(1) or Section 200A of the Income Tax Act. It highlights discrepancies between the TDS claimed in your Income Tax Return (ITR) and the TDS reflected in Form 26AS. The notice may also arise if there is a mismatch between the TDS deposited by the deductor and the details recorded in TRACES (TDS Reconciliation Analysis and Correction Enabling System). Receiving such a notice can be concerning, but identifying its implications is the first step towards resolution.
Common Reasons for TDS Mismatch
There are several reasons why a TDS mismatch may occur. One common cause is an incorrect PAN (Permanent Account Number) quoted by the deductor. If the deductor provides an incorrect PAN while deducting TDS, the credit will not reflect correctly in your Form 26AS. Another reason could be discrepancies between the details in Form 16/16A (issued by the deductor) and Form 26AS. Errors in these certificates can lead to mismatches.
Late filing of TDS returns by the deductor is another frequent issue. If returns such as Form 24Q or 26Q are not filed on time or contain errors, the corresponding TDS might not appear in Form 26AS. Additionally, mistakes in the TDS amount claimed in the ITR, failure of the deductor to deposit the TDS with the government, or selecting the wrong assessment year in the ITR can result in mismatches. Furthermore, multiple entries for the same income in Form 26AS can also create confusion, leading to TDS discrepancies.
Steps to Resolve TDS Mismatch Notice
Resolving a TDS Mismatch Intimation Notice involves several systematic steps. The first step is to verify Form 26AS and TDS certificates. Log in to the Income Tax e-Filing portal and download Form 26AS. Cross-check the TDS details with those mentioned in Form 16/16A. This comparison helps identify any discrepancies in the reported TDS amount.
The next step is to compare the ITR with Form 26AS. Ensure that the TDS amount claimed in the ITR matches the data in Form 26AS. If there are discrepancies, file a Revised Return under Section 139(5) with the correct details. In cases where TDS is not reflected in Form 26AS, it is essential to contact the deductor—such as an employer or bank—and request them to file a corrected TDS return or verify the PAN details submitted in the return.
If the deductor does not rectify the issue, you can raise a grievance on the TRACES portal (www.tdscpc.gov.in). Choose the "Request for Resolution" option and provide the necessary details to support your claim. Additionally, respond to the TDS Mismatch Notice online. Log in to the Income Tax e-Filing portal, select 'e-Proceedings' under 'Pending Actions,' and submit a response along with supporting documents like Form 16, Form 16A, and Form 26AS.
In cases where the notice is incorrectly issued under Section 143(1), file a rectification request under Section 154. This can be done through the Income Tax e-Filing portal by selecting the "Rectification Request" option under the "Services" tab and providing the required details.
If it is determined that TDS is genuinely underreported or not deducted, pay the differential tax amount along with interest under Sections 234B or 234C. After submitting your response, track the status of the resolution under the 'Response to Outstanding Demand' section on the Income Tax portal to ensure timely closure.
How to Avoid TDS Mismatch?
Preventing TDS mismatches is always better than resolving them later. One of the primary preventive measures is to verify Form 26AS before filing your ITR. This ensures that the TDS details reported are accurate and match the deductions reflected in Form 16/16A. Always ensure that the PAN provided to the deductor is correct, as any error in the PAN can result in mismatches.
Cross-checking TDS details in Form 16/16A with Form 26AS is also essential to avoid discrepancies. If any mismatches are identified, request the deductor to rectify them promptly before filing the ITR. Maintaining proper records of TDS certificates, salary slips, and tax payments is also advisable. These records serve as crucial references in case of disputes.
Conclusion
Receiving a TDS Mismatch Intimation Notice can be stressful, but timely and systematic action can help resolve the issue efficiently. Always cross-check Form 26AS before filing your ITR, maintain open communication with your deductor, and respond to notices promptly. Following the outlined steps can help avoid tax disputes and ensure a smooth resolution process, safeguarding you from additional tax liabilities and penalties.
Frequently Asked Questions
Q1. What is a TDS Mismatch Intimation Notice? 
Ans. A TDS Mismatch Intimation Notice is issued when the TDS claimed in an Income Tax Return does not match the details in Form 26AS, which is maintained by the Income Tax Department.
Q2. How do I check if I have received a TDS Mismatch Notice? 
Ans. You can check the notice on the Income Tax e-Filing portal under "Pending Actions" → "e-Proceedings." Alternatively, it may be sent to your registered email.
Q3. What should I do if my employer/deductor has not deposited TDS? 
Ans. Contact the deductor and request them to file a corrected TDS return. If they fail, you can raise a complaint on the TRACES portal or inform the Income Tax Department.
Q4. Can I claim TDS if it is not reflected in Form 26AS? 
Ans. No, TDS claims are allowed only if they are reflected in Form 26AS. If it's missing, request the deductor to rectify the issue.
Q5. How can I rectify a wrong TDS claim in my ITR? 
Ans. You can file a revised ITR under Section 139(5) or submit a rectification request under Section 154 if a mismatch notice is received.
Q6. What happens if I ignore a TDS Mismatch Notice? 
Ans. Ignoring the notice can result in demands for additional tax, interest under Sections 234B/234C, and possible penalties for incorrect tax claims.
Q7. How long does it take to resolve a TDS mismatch issue?
Ans. Resolution can take between 15 to 60 days, depending on the complexity of the case and response time from the deductor and Income Tax Department.
Q8. What if my deductor refuses to correct the TDS entry? 
Ans. You can file a complaint on the TRACES portal, submit a grievance on the Income Tax e-Filing portal, or inform the Assessing Officer for assistance.
Q9. Can I manually adjust TDS in Form 26AS? 
Ans. No, Form 26AS is auto-populated based on the deductor’s filings. Only the deductor can correct errors by submitting revised TDS returns.
Q10. What is the deadline to respond to a TDS Mismatch Notice?
Ans. You must respond within 30 days of receiving the notice to avoid further action or additional tax liabilities.

TDS, or 'Tax Deducted at Source,' is an important aspect of the Indian taxation system. It ensures the collection of tax at the point of income generation, promoting transparency and timely tax payment. However, discrepancies can occur when the TDS deducted, deposited, and reported in Form 26AS does not match. In such cases, the Income Tax Department may issue a TDS Mismatch Intimation Notice. In this article, we are going to discuss the reasons, consequences, and steps to resolve these notices because it is important to know about these things for avoiding tax disputes and penalties.

TDS Mismatch Intimation Notice

A TDS Mismatch Intimation Notice is issued under Section 143(1) or Section 200A of the Income Tax Act. It highlights discrepancies between the TDS claimed in your Income Tax Return (ITR) and the TDS reflected in Form 26AS. The notice may also arise if there is a mismatch between the TDS deposited by the deductor and the details recorded in TRACES (TDS Reconciliation Analysis and Correction Enabling System). Receiving such a notice can be concerning, but identifying its implications is the first step towards resolution.

Common Reasons for TDS Mismatch

There are several reasons why a TDS mismatch may occur. One common cause is an incorrect PAN (Permanent Account Number) quoted by the deductor. If the deductor provides an incorrect PAN while deducting TDS, the credit will not reflect correctly in your Form 26AS. Another reason could be discrepancies between the details in Form 16/16A (issued by the deductor) and Form 26AS. Errors in these certificates can lead to mismatches.

Late filing of TDS returns by the deductor is another frequent issue. If returns such as Form 24Q or 26Q are not filed on time or contain errors, the corresponding TDS might not appear in Form 26AS. Additionally, mistakes in the TDS amount claimed in the ITR, failure of the deductor to deposit the TDS with the government, or selecting the wrong assessment year in the ITR can result in mismatches. Furthermore, multiple entries for the same income in Form 26AS can also create confusion, leading to TDS discrepancies.

Steps to Resolve TDS Mismatch Notice

Resolving a TDS Mismatch Intimation Notice involves several systematic steps. The first step is to verify Form 26AS and TDS certificates. Log in to the Income Tax e-Filing portal and download Form 26AS. Cross-check the TDS details with those mentioned in Form 16/16A. This comparison helps identify any discrepancies in the reported TDS amount.

The next step is to compare the ITR with Form 26AS. Ensure that the TDS amount claimed in the ITR matches the data in Form 26AS. If there are discrepancies, file a Revised Return under Section 139(5) with the correct details. In cases where TDS is not reflected in Form 26AS, it is essential to contact the deductor—such as an employer or bank—and request them to file a corrected TDS return or verify the PAN details submitted in the return.

If the deductor does not rectify the issue, you can raise a grievance on the TRACES portal (www.tdscpc.gov.in). Choose the "Request for Resolution" option and provide the necessary details to support your claim. Additionally, respond to the TDS Mismatch Notice online. Log in to the Income Tax e-Filing portal, select 'e-Proceedings' under 'Pending Actions,' and submit a response along with supporting documents like Form 16, Form 16A, and Form 26AS.

In cases where the notice is incorrectly issued under Section 143(1), file a rectification request under Section 154. This can be done through the Income Tax e-Filing portal by selecting the "Rectification Request" option under the "Services" tab and providing the required details.

If it is determined that TDS is genuinely underreported or not deducted, pay the differential tax amount along with interest under Sections 234B or 234C. After submitting your response, track the status of the resolution under the 'Response to Outstanding Demand' section on the Income Tax portal to ensure timely closure.

How to Avoid TDS Mismatch?

Preventing TDS mismatches is always better than resolving them later. One of the primary preventive measures is to verify Form 26AS before filing your ITR. This ensures that the TDS details reported are accurate and match the deductions reflected in Form 16/16A. Always ensure that the PAN provided to the deductor is correct, as any error in the PAN can result in mismatches.

Cross-checking TDS details in Form 16/16A with Form 26AS is also essential to avoid discrepancies. If any mismatches are identified, request the deductor to rectify them promptly before filing the ITR. Maintaining proper records of TDS certificates, salary slips, and tax payments is also advisable. These records serve as crucial references in case of disputes.

Conclusion

Receiving a TDS Mismatch Intimation Notice can be stressful, but timely and systematic action can help resolve the issue efficiently. Always cross-check Form 26AS before filing your ITR, maintain open communication with your deductor, and respond to notices promptly. Following the outlined steps can help avoid tax disputes and ensure a smooth resolution process, safeguarding you from additional tax liabilities and penalties.

Frequently Asked Questions

Q1. What is a TDS Mismatch Intimation Notice?

Ans. A TDS Mismatch Intimation Notice is issued when the TDS claimed in an Income Tax Return does not match the details in Form 26AS, which is maintained by the Income Tax Department.

Q2. How do I check if I have received a TDS Mismatch Notice?

Ans. You can check the notice on the Income Tax e-Filing portal under "Pending Actions" → "e-Proceedings." Alternatively, it may be sent to your registered email.

Q3. What should I do if my employer/deductor has not deposited TDS?

Ans. Contact the deductor and request them to file a corrected TDS return. If they fail, you can raise a complaint on the TRACES portal or inform the Income Tax Department.

Q4. Can I claim TDS if it is not reflected in Form 26AS?

Ans. No, TDS claims are allowed only if they are reflected in Form 26AS. If it's missing, request the deductor to rectify the issue.

Q5. How can I rectify a wrong TDS claim in my ITR?

Ans. You can file a revised ITR under Section 139(5) or submit a rectification request under Section 154 if a mismatch notice is received.

Q6. What happens if I ignore a TDS Mismatch Notice?

Ans. Ignoring the notice can result in demands for additional tax, interest under Sections 234B/234C, and possible penalties for incorrect tax claims.

Q7. How long does it take to resolve a TDS mismatch issue?

Ans. Resolution can take between 15 to 60 days, depending on the complexity of the case and response time from the deductor and Income Tax Department.

Q8. What if my deductor refuses to correct the TDS entry?

Ans. You can file a complaint on the TRACES portal, submit a grievance on the Income Tax e-Filing portal, or inform the Assessing Officer for assistance.

Q9. Can I manually adjust TDS in Form 26AS?

Ans. No, Form 26AS is auto-populated based on the deductor’s filings. Only the deductor can correct errors by submitting revised TDS returns.

Q10. What is the deadline to respond to a TDS Mismatch Notice?

Ans. You must respond within 30 days of receiving the notice to avoid further action or additional tax liabilities.