by Anjana Sundarrajan

What is 26AS?

Form 26AS is a consolidated tax statement issued by the Income Tax Department of India. It contains mainly details of tax deducted at source (TDS), tax collected at source (TCS), and advance tax/self-assessment tax paid by the taxpayer. But it provides a detailed overview of your financial activities for a specific year.

 It serves as a comprehensive record of the taxes paid or credited against your Permanent Account Number (PAN). It also reflects details of advance tax/self-assessment tax paid, and high-value transactions entered into by the taxpayer.

The document provides a comprehensive summary of an individual’s income earned and taxes paid during a particular financial year in India. The term “26AS” stands for Section 26AS of the Income Tax Act, 1961. 

Now, let’s talk about why we need 26AS.

It’s essential for taxpayers to know Form 26AS meaning and to regularly check it to ensure accuracy. Check important details like ‘Name of Deductor,’ ‘Total Amount Paid,’ ‘Total Tax Deducted,’ and ‘Total Tax Deposited’ in their Form 26AS to verify that your income is correctly reflected, especially when tax has been deducted by vendors. 

It will help to verify if the TDS deducted aligns with their actual income, reducing the likelihood of discrepancies and potential issues with tax authorities. By regularly checking Form 26AS, taxpayers can avoid tax notices by ensuring accurate reflection of TDS details. It also serves as evidence for loans and visa applications, showcasing income and tax payment history.  In terms of income tax return filing, it simplifies the process by providing accurate information on TDS, advance tax, and self-assessment tax. Regularly checking Form 26AS helps in early detection and rectification of errors in TDS details.

Next, onto to some key points:

• Accessing Form 26AS: 

You can view and download Form 26AS through the official website of the Income Tax Department. The form is available on the TRACES (TDS Reconciliation Analysis and Correction Enabling System) website or through the income tax e-filing portal.

Components of Form 26AS:

Part A – Details of Tax Deducted at Source (TDS):

This section includes information about TDS deducted by deductors, such as employers, banks, or other entities, on behalf of the taxpayer. It specifies the deductor’s name, TAN (Tax Deduction and Collection Account Number), and the amount of TDS.

Part A1 – Details of Tax Deducted at Source for 15G/15H:

If the taxpayer has submitted Form 15G or 15H to the deductor to declare that they do not have taxable income, details of TDS deductions under these forms are provided in this section.

Part B – Details of Tax Collected at Source (TCS):

This section includes information on TCS (Tax Collected at Source) collected by sellers on certain transactions. It specifies the collector’s name, TAN, and the amount of TCS.

Part C – Details of Tax Paid (Other than TDS/TCS):

Any tax payments made by the taxpayer other than TDS and TCS, such as advance tax or self-assessment tax, are reflected in this section. It includes details like the BSR code of the bank branch, date of deposit, and the amount paid.

Part D – Details of Paid Refund:

This section displays information about any tax refunds received by the taxpayer during the financial year. It includes details like the assessment year, mode of payment, and the amount of the refund.

Part E – Details of AIR Transactions:

Information related to high-value financial transactions reported under the Annual Information Return (AIR) is provided in this section. This can include details of property transactions, credit card payments, etc.

Part F – Details of Tax Deducted on Sale of Immovable Property under section 194IA:

If TDS is deducted on the sale of immovable property, the details are included in this section. It provides information about the deductor, TAN, and the amount of TDS.

Part G – TDS Defaults:

This section highlights any discrepancies or defaults related to TDS reported by the deductor. It is important for taxpayers to review and rectify these discrepancies.

Part H – Outstanding Tax Demand:

If there is any outstanding tax demand against the taxpayer, details of such demand are provided in this section.

• Verification of Tax Credits: 

Form 26AS is an important document for taxpayers to verify whether the TDS deducted by deductors is actually deposited with the government on their behalf. It helps in ensuring that the tax credits claimed by the taxpayer match with the data available with the Income Tax Department.

• Filing Income Tax Returns: 

Taxpayers are advised to reconcile the details mentioned in Form 26AS with their own records before filing income tax returns. Any discrepancies should be rectified to avoid issues with the tax authorities.

• Periodic Updates: 

Form 26AS is periodically updated as and when new information is received by the Income Tax Department. Therefore, it is advisable to check the latest version before filing income tax returns.

It’s important to note that processes and details related to tax forms may be subject to changes, and it’s recommended to refer to the latest guidelines or consult with a tax professional for the most accurate and up-to-date information.

Reconciliation of 26 AS

Reconciliation of Form 26AS is a critical process for taxpayers to ensure the accuracy of their financial records and compliance with income tax regulations. The reconciliation process involves systematically comparing the information presented in Form 26AS with the taxpayer’s internal financial documentation.

Firstly, obtaining Form 26AS is essential, and this can be done through the income tax department’s website or the taxpayer’s net banking portal. Once the form is acquired, a thorough review of the TDS details is conducted. This includes scrutinizing the deductor’s name, TAN, and the amount of TDS deducted for each transaction. These details are then cross-verified with the taxpayer’s records, such as salary slips, bank statements, or any other relevant documents.

Here are the general steps involved in the reconciliation process:

• Collect Information: Gather all relevant documents such as salary slips, TDS certificates, and other income-related documents.
• Verify TDS Entries: Check if the TDS entries in your Form 26AS match the TDS certificates received from deductors. Ensure that all deductions have been properly credited.
• Verify Other Income: If you have income from other sources, verify if the TDS or TCS related to those incomes is correctly reflected in your Form 26AS.
• Compare with Tax Returns: Compare the information in Form 26AS with your income tax return. Ensure that all income, deductions, and taxes paid are accurately reflected.
• Rectify Discrepancies: If you find any discrepancies, contact the deductor to rectify them. Ensure that TDS certificates are issued with correct details.
• File Rectification Request: If there are discrepancies that cannot be resolved directly with the deductor, you may need to file a rectification request with the income tax department.

Mismatch between Sales Register and Form 26AS

A mismatch between the sales register and Form 26AS can lead to discrepancies in the reporting of income and taxes.

Why does it happen?

Delayed Reporting:

The timing difference between when a transaction is recorded in your sales register and when it is reported in Form 26AS can lead to discrepancies.

Incorrect TDS Deductions:

Mismatches often arise when the TDS deducted by customers is either not reported or inaccurately reported in Form 26AS. This can occur due to errors in TDS certificates or delays in deductors submitting TDS details to the tax department.

How can we prevent such mismatches?

Verify Sales Register Accuracy:

• Double-check your sales register to ensure that all sales transactions are accurately recorded.
• Confirm that the entries in the sales register match the actual sales made during the relevant financial period.

Check TDS Deductions:

• Review Form 26AS to verify if the TDS deducted by customers or clients matches the sales register.
• Ensure that TDS deductions are correctly reflected in Form 26AS for the corresponding sales transactions.

Advance Tax

There is also a concept in 26AS known as Advance Tax. You will need to pay this when your tax liability exceeds Rs. 10,000 after reducing TDS. Payment of this tax benefits both the government as well as the organisation or individual paying it. In the government’s point of view, it helps to provide a steady flow of income throughout the entire year. From an organisation or individual’s point of view it makes it easier to pay the tax in instalments rather than the whole amount at the end of the year. The payer has to basically estimate their income for the year and based off of that they’d need to pay this tax. If the payer has missed to pay the advance tax, they will be levied interest under the Income Tax Act.

Importance & Benefits of 26 AS

Verification of Tax Deductions: 

26AS helps to verify whether tax had been deducted by employers and other deductors have been correctly deposited with the relevant tax authorities. It should include TDS on salary, interest, rent etc. This helps taxpayers to verify whether the tax deductions are accurate.

Facilitates Income Tax Return (ITR) Filing: 

Since Form 26AS provides a consolidated view including TDS, advance tax, self-assessment tax etc, it helps taxpayers cross verify the details in this form with their own records before filing the returns. This helps reduce error.

Avoidance of Double Taxation: 

For individuals who might have income from multiple sources or have paid tax at different places, this form will help avoid double taxation. Since this form shows all the taxes paid, it helps tax payers to claim exemptions for tax which has been previously paid in the year.