How to Respond to a Notice for Misreporting TDS Credits with TaxBuddy
- PRITI SIRDESHMUKH
- Nov 28, 2025
- 9 min read
Misreporting TDS credits often results in income tax notices under Section 143(1) when the details claimed in an ITR do not match Form 26AS, AIS, or the deductor’s filings. These discrepancies arise from incorrect entries, delays in TRACES updates, or deductor errors, and taxpayers must respond quickly to avoid penalties or refund delays. Understanding why the mismatch occurred, verifying information online, and submitting either a revised return or rectification request helps close the notice efficiently. Platforms likeTaxBuddy play an important role in helping taxpayers reconcile TDS data accurately and avoid processing complications.
Table of Contents
Understanding TDS Misreporting Notices
Misreporting TDS credits usually appears in the form of intimation under Section 143(1), where the tax department compares the TDS claimed in an ITR with the TDS available in Form 26AS, AIS, or the deductor’s TDS return. A mismatch indicates that the credit claimed cannot be verified, prompting the system to flag the return. These errors may seem technical, but they fundamentally relate to incorrect reporting, incomplete deductor filings, or delays in TRACES updates. The notice itself serves as an alert, giving the taxpayer an opportunity to correct information before any tax demand or penalty is raised.
Why TDS Mismatches Occur in ITR
Several triggers create discrepancies in TDS credit reporting. Incorrect TAN entry, selecting the wrong assessment year, or entering TDS amounts that do not align with Form 16/16A are common taxpayer errors. On the deductor’s side, late TDS return filing or wrong PAN mapping may prevent data from appearing in Form 26AS. Some mismatches arise when financial institutions like banks report incorrect account details, causing a break in the TDS credit chain. Even small variances—such as misreported interest income—can generate a misreporting notice during automated processing.
How to Respond to a Notice for Misreporting TDS Credits
Response begins by matching the discrepancy highlighted in the notice with Form 26AS, AIS, and Form 16/16A. The objective is to determine whether the mismatch is due to an incorrect claim in the ITR or because the deductor has not correctly deposited or reported TDS. Based on this assessment, either a revised return under Section 139(5) or a rectification request under Section 154 must be filed. Quick action is important because unresolved errors may delay refund issuance or create additional tax liability. Platforms like TaxBuddy simplify this process by identifying the cause and guiding the corrective steps.
Step-by-Step Portal Process to Resolve TDS Errors
The e-filing portal provides a structured workflow to address these mismatches. After logging in, the notice appears under “Pending Actions.” Selecting the notice displays the exact items flagged by the system. The next step is to cross-check each mismatch against Form 26AS, AIS, and TDS certificates. If required, a corrected ITR can be filed using the “Revised Return” option. If the return is correct and the department’s data has gaps, the “Rectification” feature allows submission of supporting documents. Tracking the notice response is possible under “Response to Outstanding Demand,” ensuring complete visibility.
When to File a Revised ITR Under Section 139(5)
A revised ITR is required when the mismatch originates from errors entered by the taxpayer. For example, claiming TDS from a financial year different from the one reported in Form 26AS or entering values based on provisional documents instead of final certificates must be corrected through a revised filing. Section 139(5) permits revised returns until the end of the assessment year, enabling taxpayers to correct omissions and inaccuracies without penalty, provided the original ITR was filed on time. Revising the return aligns the TDS data with official records, allowing smooth processing.
When to Submit a Rectification Request Under Section 154
Rectification becomes necessary when the ITR is accurate, but Form 26AS or AIS does not yet reflect the correct TDS information. This situation typically happens when the deductor delays filing a revised TDS return or files incorrect entries in the TDS statement. In such cases, rectification under Section 154 allows taxpayers to upload supporting documents such as Form 16/16A, salary slips, bank TDS certificates, or passbook entries. The department reviews these documents and may allow the missing credits once the deductor submits updated TDS returns.
Checking Form 26AS, AIS, Form 16/16A for TDS Reconciliation
Accurate reconciliation requires validating every TDS entry through official sources. Form 26AS provides a consolidated view of TDS deposited by all deductors, AIS provides broader financial information, and Form 16/16A reflects deductions made by employers and institutions. Aligning these documents helps identify whether the mismatch is due toa reporting error or a deductor non-compliance. Regular reconciliation avoids last-minute surprises and reduces the likelihood of receiving a misreporting notice.
Bank Account KYC Errors That Trigger TDS Mismatch Notices
Bank account opening forms such as CKYC-1, Form 60, or customer information sheets carry critical identifiers, including PAN, account number, and account type. If banks incorrectly record these details or link the wrong PAN to an account, TDS credits fail to reflect in Form 26AS. When this mismatch reaches automated processing, it raises a system-generated notice. The remedy involves updating KYC details, ensuring correct PAN linkage, and supporting the rectification with bank statement extracts.
How Incorrect Bank Details Affect TDS Credit Mapping
Incorrect IFSC codes, old account numbers, or outdated MICR codes disrupt credit mapping between bank-submitted TDS information and departmental records. Banks' report details exactly as captured in account opening forms; therefore, outdated or incorrect KYC entries lead to mismatches. When the notice appears, taxpayers are often unaware that the root cause lies in bank documentation. Rectification requires updating bank details and submitting recent passbook entries or account confirmation statements.
Fixing NRE/NRO Account Errors for NRIs
NRIs frequently face mismatches due to resident-status errors, incorrect PAN linking to NRE/NRO accounts, or incomplete FEMA-compliant documentation at the banking level. Banks may mistakenly report TDS under the wrong residency type or without mapping PAN correctly. This disrupts TDS reflection in Form 26AS for NRIs. Resolving such issues involves requesting the bank to update residency details, correcting PAN records, and then filing an updated ITR or rectification once the corrected entries appear in Form 26AS.
Common Mistakes While Responding to TDS Notices
Errors commonly made during the response process include uploading incomplete documents, replying without cross-checking Form 26AS, selecting incorrect options while submitting rectification, or filing revised returns without correcting deductor details. Responding without contacting the deductor—especially employers, banks, or financial institutions—also causes delays. Some taxpayers ignore notices or respond after deadlines, resulting in interest or additional tax demands. Checking each discrepancy thoroughly prevents repeated notices.
How TaxBuddy Helps Resolve TDS Misreporting Intimations
TaxBuddy simplifies the process by identifying the mismatch source, verifying documents, and guiding whether a revised return or rectification is appropriate. The tax expert checks TDS entries against Form 26AS, AIS, and Form 16/16A, ensuring accurate reconciliation. For deductor-side issues, TaxBuddy assists in preparing communication drafts. The platform offers expert-assisted guidance that eliminates errors and reduces the chances of follow-up notices, making the entire compliance experience more streamlined.
Conclusion
Responding swiftly to a misreporting notice requires careful reconciliation and timely correction through revised filing or rectification. Ensuring accuracy in TDS reporting avoids future issues and faster refund processing. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? TaxBuddy provides two distinct modes: a self-filing option designed for individuals comfortable navigating the filing process with automated guidance, and an expert-assisted mode where a tax professional manages the entire return. The self-filing system includes intelligent prompts, prefilled information support, and automated checks for mismatches like TDS credits. The expert-assisted plan goes deeper, offering personalised review, error correction, reconciliation of Form 26AS/AIS, and support for notices. Both plans aim to deliver accuracy and reduce the chances of receiving automated mismatches under Section 143(1).
Q2. Which is the best site to file ITR? The best site depends on the level of guidance required. The official Income Tax Department portal is suitable for straightforward returns when all financial data aligns well with Form 26AS and AIS. Taxpayers who want automated error checks, additional support for TDS reconciliation, and expert review often prefer platforms like TaxBuddy. These platforms provide a more intuitive experience, highlight gaps between reported and available TDS data, and help minimise processing delays or corrective notices.
Q3. Where to file an income tax return? Returns can be filed directly through the Income Tax Department’s e-filing portal or via authorised online tax-filing platforms. The advantage of filing through platforms like TaxBuddy lies in real-time validation of key fields, automated income classification, and reconciliation tools that ensure claimed TDS credits exactly match departmental records. These features simplify the entire filing process and reduce the risk of future notices for misreporting or mismatches.
Q4. What should be checked first when a TDS misreporting notice is received? The first step is to review the notice summary and compare the highlighted mismatch with entries in Form 26AS and AIS. This identifies whether the difference arises from incorrect entries in the ITR or missing uploads from the deductor. Confirming the source of the discrepancy helps determine whether a revised return or a rectification request is required. Supporting documents such as Form 16, Form 16A, and bank statements should also be kept ready for verification or submission.
Q5. How does a revised return help correct TDS mismatches? A revised return under Section 139(5) allows correction of errors originally made while filing the ITR. If the mismatch in TDS credits is due to wrong values entered, incorrect TAN selected, or omission of income sections tied to TDS deductions, a revised return realigns the information with official records. Filing the corrected return ensures proper credit allocation during processing and prevents future notices for the same issue.
Q6. What documents are needed when filing a rectification request for TDS mismatch? Supporting documents depend on the nature of the mismatch. Common attachments include Form 16/16A, bank TDS certificates, salary slips, bond interest certificates, and passbook entries showing TDS credits. These documents establish the legitimacy of the TDS claim until the deductor updates the TDS return. Uploading complete documentation increases the chances of rectification approval without further queries.
Q7. Can a TDS mismatch occur even if the deductor has deducted the tax correctly? Yes. Mismatches may arise even when tax is correctly deducted but incorrectly reported to the department. This occurs when the deductor files an erroneous TDS statement, maps TDS under an incorrect PAN, selects the wrong section code, or delays filing the return altogether. Until the deductor files rectified statements, Form 26AS will not show the correct credit. Such cases typically require filing a rectification request rather than a revised return.
Q8. Can NRIs receive TDS misreporting notices? NRIs often receive such notices due to residency-type errors in bank forms, incorrect PAN mapping with NRE/NRO accounts, or inconsistent reporting by financial institutions. TDS deducted on deposits or rental income may not reflect in Form 26AS if the bank uses outdated KYC data. Fixing the mismatch requires updating residency status, ensuring proper PAN linkage, obtaining corrected account statements, and filing a revised return or rectification once the changes reflect.
Q9. What happens if a TDS mismatch notice is ignored? Ignoring the notice leads to automatic adjustments during processing, usually resulting in reduced TDS credit or additional tax demand. If the mismatch pertains to a significant amount, interest may also be calculated under Sections 234B and 234C. In some cases, refunds are held back until the mismatch is resolved. Failure to respond within the specified timeline may escalate the matter, requiring further intervention during assessment.
Q10. How long does it take for corrected TDS data to reflect in Form 26AS? Timing depends on the deductor’s filing cycle. Once a deductor files a corrected TDS return, the updated information typically appears in Form 26AS within 7–15 days after TRACES processes the request. Financial institutions and banks may sometimes require longer to revise their filings. Taxpayers should monitor Form 26AS regularly and submit a rectification request once the updated entries reflect.
Q11. Do bank account KYC details impact TDS credit reflection? Yes. Bank KYC forms capture essential identifiers such as PAN, account number, IFSC code, and residency status. If these details do not match the information submitted to the tax department, TDS credits may fail to map correctly. Errors in NRE/NRO classification, outdated PAN entries, or incorrect account numbers are common triggers. Once corrected, updated bank statements can be used to support rectification requests.
Q12. Can TaxBuddy help resolve notices related to misreported TDS credits? Yes. TaxBuddy offers structured support for TDS-related notices by identifying the mismatch source, guiding document preparation, and recommending the appropriate corrective action—whether revised filing or rectification. The platform’s experts help reconcile Form 26AS, AIS, and the taxpayer’s records, reducing processing delays and ensuring the notice is closed correctly. This service is particularly helpful when deductor-side errors complicate the response process.
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