If you are filing tax returns as an individual or as a company, there is something called Form 26AS which captures all the tax paid on your behalf by your employer or clients? This is mapped the TAN of the person deducting the tax and also to your PAN number. The Form 26AS is available to download from your registered space in the Income Tax website itself and is quite simple and can be downloaded year wise for the last 10 years. What is the importance of Form 26AS and at a fundamental level exactly what is form 26AS of Income Tax act? Why to check Form 26AS before filing income tax returns and why is the reconciliation with your returns useful. Let us begin by understanding what is Form 26AS in the first place?
What is the role of Form 26AS?
Form 26AS is basically a consolidated tax credit statement that has all details of various taxes deducted on your income at source. This information is classified quarter wise and client wise based on TAN number. In case you are employed, the Form 26AS will map your employer based on the TAN number. You can access Form 26AS from the tax department’s website. Some banks also provide access to Form 26AS for their account holders. If you have an internet access to your bank account, then you have the facility to directly access your Form 26AS from the secured area of the bank login itself.
In a way, the Form 26AS is like 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), and advance-tax and self-assessment tax. All kinds of taxes paid against your PAN number are captured in this report in a very comprehensive manner.
Here is why you need to verify with your Form 26AS
A taxpayer has to ensure that the income tax return or ITR is in sync with Form 26AS. In case of any discrepancy, the income tax department may issue tax notice to seek explanation for such discrepancies in the figures of income or TDS appearing in Form 26AS and income tax return. The IT department uses Form 26AS as the benchmark for all its analysis and verification and notices are issued accordingly if there is any discrepancy.
As a rule, the taxpayer must ensure that the entries appearing in Form 26AS must belong to him and any mismatch in data must be corrected before filing of ITR in order to avoid a notice from the Income Tax Department.
The Form 26AS has another purpose. There are a few transactions which are required to be reported by the banks or financial institutions directly to the Income Tax Department based on the mapped PAN number. For example, deposit of cash in bank account above a threshold, buying a house property etc is automatically reported to the IT department. These transactions will appear in your Form 26AS under AIR (annual information return) column only if it crosses the threshold limit.
How to handle any mismatch in the Form 26AS
As far as the tax department is concerned, it will only consider the Form 26AS as its authentic document. 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. That is why it is always to verify the Form 26AS before filing your ITR. Discrepancies could occur because you may have missed paying tax on some capital gains or your employer or client may have deducted tax but not deposited. In either case, you must immediately take it up and get it rectified.
Downloading and verification of Form 26AS must be done well before the filing of returns so that you have adequate time to take up the discrepancies with your employers or clients. Form 26As can be downloaded by logging into your e-filing account on the income tax department’s tax filing website. Thereafter, go to ‘My Account’ tab and select Form 26AS from the drop-down menu. The taxpayer will then be directed to TDS Reconciliation Analysis and Correction Enabling System (TRACES) website. Here you can just select the assessment year and format and view or download the Form 26AS. The Form 26AS can be viewed in HTML format and can be downloaded in text, excel or in PDF format.