Freelance ITR Filing: Common Red Flags in Form 26AS
- Farheen Mukadam
- Jul 29
- 9 min read
Form 26AS is a crucial document for all taxpayers, including freelancers, as it contains a comprehensive summary of the tax deductions that have been made on your behalf. It includes details of Tax Deducted at Source (TDS), Advance Tax, and Self-Assessment Tax paid. For freelancers, checking Form 26AS is particularly important, as it helps ensure that all taxes deducted from their income are properly credited. Freelancers often receive income from multiple sources, and verifying this form can help identify discrepancies, such as unclaimed credits, mismatches in TDS deductions, or any tax payments that might not have been correctly reflected. Understanding how to use Form 26AS effectively can ensure that you are not paying more tax than necessary, and it can also prevent delays in processing refunds.
Table of Contents
What is Form 26AS and Why Should Freelancers Check It?
Form 26AS is a consolidated tax statement that includes all the taxes paid on behalf of the taxpayer to the Income Tax Department. It includes details such as:
TDS (Tax Deducted at Source): This section shows the tax deducted by employers, clients, or other payers on your income.
Advance Tax: If you have made advance tax payments, these are reflected in this part of the form.
Self-Assessment Tax: Any tax paid voluntarily by the taxpayer after assessing their liability for the year.
Refund Details: This section shows whether you are due for a refund and the status of any refunds you have received.
High-Value Transactions: It may also list high-value financial transactions reported by banks, financial institutions, or other entities.
Freelancers should check Form 26AS to ensure that the TDS deductions shown match the amounts paid by their clients or employers. Sometimes, clients or employers may deduct tax but fail to deposit it with the government, leading to mismatches. By checking this form regularly, freelancers can ensure their tax filings are accurate and avoid paying additional taxes unnecessarily.
TDS Mismatch or Unclaimed Credits
One of the most common issues freelancers face when checking their Form 26AS is a mismatch between the TDS shown in the form and what they have actually received from their clients. Sometimes, clients may deduct TDS but fail to deposit it with the tax authorities, resulting in the tax not being reflected in Form 26AS. This can lead to discrepancies in the amount of tax paid and the actual tax liabilities calculated by the freelancer.
If there is a mismatch, freelancers should take the following steps:
Contact the deductor (client or employer) to ensure that the TDS was deposited with the government.
If the issue persists, the freelancer can file a grievance with the Income Tax Department through the official portal, providing the necessary details of the transaction.
If TDS credits have been missed or unclaimed, freelancers can claim the credit by filing a revised return once the issue is resolved.
It's crucial to resolve these mismatches early to ensure there are no delays in the refund process or incorrect tax calculations.
Multiple TDS Entries from Unknown Deductors
Sometimes, freelancers may notice multiple TDS entries in Form 26AS from unknown or unfamiliar deductors. This could happen if clients or employers have failed to update their PAN details, or if there have been issues with the TDS payments being allocated correctly.
To address this issue:
Contact your clients: Reach out to the clients who have made TDS deductions and ensure they are correctly attributing the TDS payments to your PAN.
Check with the Income Tax Department: If the issue persists, freelancers should approach the Income Tax Department for clarification or to file a correction request.
Track the payments: Keep track of all TDS payments and verify them with the payments shown in Form 26AS.
It is important for freelancers to ensure that all TDS entries are accurate, as missing or incorrect TDS entries can affect their overall tax liability and refund.
High-Value Transactions Not Matching Books
Another potential issue that freelancers may encounter in Form 26AS is high-value transactions that do not match the entries in their books of accounts. These high-value transactions could include payments for services provided, but they may not be fully reflected in the freelancer’s financial records.
Freelancers should carefully check Form 26AS for any high-value transactions that appear unfamiliar or that they haven't recorded. Discrepancies between the two could indicate errors in the TDS deduction, unreported income, or missing payments. If discrepancies are found:
Cross-check the income entries with invoices issued to clients.
Verify with clients whether the payments have been made and correctly reported.
Address any discrepancies promptly, as these can affect your tax filings and possibly trigger notices from the Income Tax Department.
It's vital to ensure that all income, especially high-value transactions, is reported correctly to avoid issues with tax authorities.
Advance Tax and Self-Assessment Tax Not Updated
For freelancers, paying advance tax and self-assessment tax is important, as they are not subject to TDS by employers. These taxes are usually paid quarterly or annually, but freelancers often face issues with these payments not being updated or reflected in Form 26AS.
If the advance or self-assessment tax is missing or not updated in Form 26AS:
Check payment details: Review your payment receipts to confirm that the payments were made correctly.
Verify the bank details: Ensure that the correct bank account and payment method were used for the tax payments.
Contact the Income Tax Department: If the issue is not resolved, contact the Income Tax Department for assistance and provide evidence of the payments made.
Ensuring these payments are updated in Form 26AS is important for calculating accurate tax liabilities and avoiding penalties.
Mismatch between 26AS and AIS
Form 26AS may not always match the Annual Information Statement (AIS), which also contains information about tax payments, income, and other transactions. If discrepancies occur between the two forms, it’s important to investigate further.
The mismatch could be due to the delay in updating data between the two forms, or due to errors in the system. In such cases:
Check for data inconsistencies: Verify if the TDS entries, advance tax, or other relevant information matches between the two forms.
Contact the relevant authorities: If discrepancies persist, it may be necessary to contact the tax authorities or consult a tax professional to resolve the mismatch.
Promptly resolving these discrepancies is important to ensure that your tax filing is accurate and that you don’t face delays in receiving your refund or penalties for underreporting income.
Conclusion
Form 26AS plays a crucial role in ensuring that your tax filings are accurate and complete. Freelancers, in particular, must regularly check this form to confirm that all TDS deductions are properly credited, income is reported correctly, and any discrepancies are addressed promptly. By doing so, freelancers can avoid unnecessary tax payments, receive timely refunds, and stay compliant with tax regulations. If any issues arise, it’s important to take corrective steps immediately, whether it’s contacting clients, verifying payments, or reaching out to the Income Tax Department. Checking Form 26AS regularly is an essential part of managing your tax obligations effectively and avoiding potential problems. For anyone looking for assistance in tax filing, it is highly recommended to download theTaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1: What is the purpose of Form 26AS?
Form 26AS is a consolidated tax statement issued by the Income Tax Department, which includes detailed information about TDS (Tax Deducted at Source), advance tax, and self-assessment tax payments made against your PAN. This form is essential for verifying that taxes have been correctly deducted and reported by the deductor. It acts as a proof of tax payments made on your behalf and ensures that the correct amount of tax is reflected in your records for ITR filing.
Q2: Why should freelancers check Form 26AS?
Freelancers should regularly check Form 26AS to ensure that the TDS deductions made by their clients are accurately reported and deposited with the Income Tax Department. By reviewing this form, freelancers can ensure that all TDS credits are claimed, avoid discrepancies, and ensure timely processing of their refunds. If any TDS is missing or incorrectly reported, freelancers can take corrective actions to avoid delays or penalties.
Q3: How can I fix TDS mismatches in Form 26AS?
To fix TDS mismatches in Form 26AS, first, confirm with the deductor (your client or employer) that the TDS was deposited with the Income Tax Department. If the issue persists, raise a grievance with the Income Tax Department or seek their assistance through the online portal. If the mismatch is due to incorrect PAN information or improper deposit, the deductor must correct it, and you should recheck after the necessary updates are made.
Q4: What should I do if I find unclaimed TDS in Form 26AS?
If you find unclaimed TDS in Form 26AS, verify whether the TDS was actually deducted by your client and ensure it has been deposited correctly. If the TDS has not been deposited, follow up with the client to rectify the situation. You should also keep records of all communications to support any claims in case of future discrepancies. If your client does not resolve the issue, contact the Income Tax Department for further assistance.
Q5: How can I track high-value transactions in Form 26AS?
Form 26AS includes details of high-value transactions, which may be flagged for scrutiny. If you notice any high-value transactions that seem unfamiliar or do not match your records, cross-check them with your books, invoices, and payment receipts. Discrepancies should be immediately addressed by reviewing the corresponding transaction details with the relevant parties to avoid any potential issues, including penalties or investigations by the tax authorities.
Q6: What if Advance Tax or Self-Assessment Tax is not reflected in Form 26AS?
If your Advance Tax or Self-Assessment Tax payments are not reflected in Form 26AS, first check your payment receipts to ensure that the tax was paid correctly. Verify the payment method, such as through online banking or cheque. If the issue remains unresolved, contact the Income Tax Department for clarification. It’s important to ensure that these payments are reflected, as they are essential for accurate tax calculations during ITR filing.
Q7: What happens if Form 26AS doesn’t match the AIS?
If there is a mismatch between Form 26AS and the Annual Information Statement (AIS), it could indicate discrepancies in the reported income, tax payments, or TDS deductions. This can happen due to incorrect data entry by the deductor or issues during the reconciliation of tax payments. To resolve this, you should carefully review both documents and report the discrepancies to the Income Tax Department. If necessary, file a grievance to ensure the correct information is updated.
Q8: Can I claim TDS credits if they are not reflected in Form 26AS?
No, you cannot claim TDS credits if they are not reflected in Form 26AS. The credits must be correctly reported in the form before you can claim them while filing your ITR. If the TDS is missing, you must ensure that the deductor has deposited it with the tax authorities. You may also have to reach out to the Income Tax Department to resolve the issue before claiming the TDS credits.
Q9: How often should freelancers check Form 26AS?
Freelancers should check Form 26AS regularly, ideally every quarter, to ensure that all TDS deductions and payments are accurately reflected and updated. Regular checks help freelancers identify any discrepancies early and address them before filing their returns. By doing so, they can ensure timely refund processing and avoid errors during the filing process.
Q10: Can I make corrections to my Form 26AS?
No, you cannot make corrections directly to Form 26AS. If there are discrepancies in the form, such as missing TDS or incorrect details, you must contact the deductor (your client or employer) to resolve the issue. If the issue persists or if the deductor fails to update the details, you can contact the Income Tax Department to initiate the necessary corrections. The form will be updated once the issue is resolved by the relevant party.
Q11: How do I access my Form 26AS?
You can access Form 26AS through the official Income Tax Department website. To do so, log into your account using your PAN details and navigate to the ‘View Form 26AS’ section. You can also access it through net banking services provided by many banks. Simply log into your bank’s net banking portal, where Form 26AS can be downloaded for your reference.
Q12: What should I do if my client’s TDS is not reflecting in Form 26AS?
If your client’s TDS is not reflecting in Form 26AS, first confirm with the client that the TDS was deducted and deposited with the Income Tax Department. If the TDS is still missing, ask the client to verify and rectify the situation with the tax authorities. In case the issue persists, you can contact the Income Tax Department for further assistance and clarification. Keep records of your communication and actions in case further steps are needed.
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