How to Report Missed TDS Entries and Avoid Penalties

Missed TDS entries can cause serious discrepancies in your income tax records, often leading to refund delays, penalty notices, or incorrect tax assessments. Under the Income Tax Act, 1961, every TDS deduction must be accurately reported and matched with Form 26AS. A mismatch or omission can attract penalties or even block refunds. Ensuring all TDS credits are correctly reflected is essential to maintain compliance and prevent financial losses.

To report missed TDS entries and avoid penalties, taxpayers should verify their Form 26AS, use ITR-U for corrections, and ensure timely communication with deductors and tax authorities to fix discrepancies before filing or updating returns.

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Table of Contents

• How to Report Missed TDS Entries

• Verify TDS Details in Form 26AS

• Correct TDS Errors Using ITR-U

• Missed Filing or Missed TDS Credit: What to Do

• Communicate with Deductors and Tax Authorities

• Important Dates and Compliance Guidelines

• How to Avoid Penalties for Missed TDS

• Common Questions Related to TDS on Bank Accounts

• Conclusion

• FAQs

How to Report Missed TDS Entries

Reporting missed TDS entries requires a systematic approach to ensure that every deduction made against your PAN is accurately reflected in your Income Tax Return (ITR). The first step is to verify all TDS credits available in Form 26AS or the Annual Information Statement (AIS). These documents consolidate tax deducted by various deductors such as employers, banks, and clients. If any TDS entry is missing, it’s essential to identify whether the error is due to delayed reporting by the deductor or incorrect details such as mismatched PAN or TAN. Once identified, the issue can be rectified through direct communication with the deductor or by filing a corrected return using the ITR-U form under Section 139(8A).

Verify TDS Details in Form 26AS

Form 26AS acts as the central record of all tax deducted and deposited on your behalf. It is available on the income tax e-filing portal and should be reviewed before filing your return. Every taxpayer should check this form quarterly to confirm that the deducted amounts are correctly credited against their PAN. Mismatches may occur when a deductor delays TDS return filing, uses an incorrect PAN, or fails to deposit the tax with the government. If you notice such discrepancies, immediately contact the deductor to revise their TDS statement. Consistent verification ensures you claim accurate TDS credits and avoid mismatches during processing.

Correct TDS Errors Using ITR-U

The ITR-U (Updated Return) facility is a valuable tool for taxpayers who missed reporting TDS entries or other income details. Introduced under Section 139(8A) of the Income Tax Act, it allows individuals to update their previously filed returns within four years from the end of the relevant assessment year. Using ITR-U, taxpayers can add omitted TDS entries, correct reported income, or revise deductions. However, when filing an updated return, additional tax liability may apply based on the timing of correction. Filing early ensures lower interest and penalty exposure. This mechanism simplifies compliance and helps taxpayers rectify genuine errors without waiting for a notice.

Missed Filing or Missed TDS Credit: What to Do

If you failed to file an ITR for a previous year where TDS was deducted, you can still claim the benefit by declaring that income and corresponding TDS credit in your current year’s ITR under the Schedule TDS section. You must mention the financial year during which the tax was deducted. This is particularly useful for cases where there was no taxable income earlier but refunds are due for TDS deducted on interest or salary. For situations involving taxable income, you may need to file a condonation request under Section 119(2)(b) to the Assessing Officer, providing valid reasons for the delay. Acceptance of such requests depends on the genuineness of the cause and the quantum of the TDS amount involved.

Communicate with Deductors and Tax Authorities

When TDS is deducted but not reflected in Form 26AS, the most effective step is to contact the deductor—be it an employer, bank, or client—and request correction through a revised TDS return. If the deductor fails to act, the taxpayer can raise a grievance on the TRACES portal using the “Request for Resolution” feature. This allows the Income Tax Department to track and address the issue. For unresolved cases, a written application can also be submitted to the TDS Assessing Officer or the Commissioner of Income Tax. Timely follow-up and documentation, such as salary slips or TDS certificates, strengthen the case and help recover the missing credits efficiently.

Important Dates and Compliance Guidelines

Compliance timelines are critical to prevent penalties related to TDS reporting. TDS statements are generally filed quarterly by deductors, while taxpayers must file their ITR by the due date—typically July 31 for individuals and September 30 for audit cases. The ITR-U can be filed within two years after the end of the relevant assessment year. Regularly tracking these deadlines and verifying TDS in advance avoids last-minute corrections. Keeping accurate records of PAN-linked transactions and maintaining copies of Form 16 or TDS certificates can significantly ease reconciliation during filing season.

How to Avoid Penalties for Missed TDS

Penalties typically arise from mismatched or unreported TDS entries. To prevent these, taxpayers should:

• Regularly verify Form 26AS and AIS to ensure all deductions are updated.

• Ensure the PAN shared with deductors is correct.

• Use the ITR-U facility to rectify missed or erroneous entries within the permitted window.

• Raise a grievance on TRACES if deductors fail to update their TDS returns.

• Maintain a record of all TDS certificates and communication with deductors for reference.

Taking these preventive steps ensures compliance, accurate refunds, and reduces exposure to penalty notices or interest charges under Section 234F.

Common Questions Related to TDS on Bank Accounts

TDS on bank interest is commonly overlooked, especially for fixed deposits. If such entries are missed, they can be corrected using ITR-U or by adding the missed interest and TDS credit under Schedule TDS in the current year’s return. PAN details provided in bank account opening forms directly impact TDS credit reflection; incorrect PAN entries can result in TDS not being credited to your account. In such cases, update the PAN with the bank and follow up via the TRACES portal for rectification. Always verify Form 26AS at the end of the financial year to confirm that all TDS credits from bank interest or FDs have been properly reported and deposited.

Conclusion

Monitoring TDS credits and addressing missed entries promptly ensures smooth refund processing and prevents future disputes. With changing compliance timelines and digital filing systems, maintaining updated tax records has become simpler yet crucial. Platforms like TaxBuddy help taxpayers identify mismatches in Form 26AS, guide them through the ITR-U filing process, and ensure accurate reporting for a seamless tax experience. 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 offers both self-filing and expert-assisted income tax return filing options. The self-filing plan is designed for individuals who prefer to file their returns independently but with the support of an AI-driven system that automatically imports Form 16, Form 26AS, and AIS data to ensure accuracy. It provides real-time validation to avoid common errors. The expert-assisted plan, on the other hand, connects users directly with certified tax professionals who review documents, handle complex cases like capital gains or foreign income, and ensure maximum deductions are claimed. This dual approach makes TaxBuddy suitable for all types of taxpayers—from salaried employees to freelancers and business owners.

Q2. Which is the best site to file ITR? The official Income Tax Department’s e-filing portal (www.incometax.gov.in) remains the government-approved platform for filing ITRs in India. However, for users seeking convenience, automation, and expert guidance, third-party platforms like TaxBuddy provide a smoother and more efficient filing experience. TaxBuddy’s AI-powered system auto-fetches income details, validates entries, and minimizes manual data entry, making it far more intuitive for taxpayers. It also offers post-filing assistance such as notice management and correction filing, which are not available on the government portal.

Q3. Where to file an income tax return? Income tax returns can be filed either through the official government e-filing website or through authorized e-filing intermediaries like TaxBuddy. For taxpayers who want to avoid the complexities of manual filing, using TaxBuddy’s mobile app or web portal ensures guided assistance, automated data fetching, and seamless verification. The platform also provides instant updates on filing status, refund tracking, and notice resolution, making it an ideal option for both individuals and small businesses.

Q4. Can TDS errors be corrected after the original ITR filing deadline? Yes, taxpayers can correct TDS-related errors even after the original ITR deadline by filing an Updated Return using Form ITR-U under Section 139(8A). This form allows taxpayers to rectify missed TDS entries, income omissions, or other errors within four years from the end of the relevant assessment year. However, if the correction results in additional tax liability, interest and late fees may apply. Timely submission of ITR-U helps avoid further penalties or departmental scrutiny.

Q5. What if my employer has deducted TDS but not deposited it? If TDS has been deducted from your salary but not deposited with the Income Tax Department, the first step is to contact your employer and request immediate correction. Often, such issues arise from incorrect PAN reporting or delays in TDS return submission. If the employer fails to act, the employee can file a complaint on the TRACES portal or approach the jurisdictional TDS Assessing Officer. The tax department can then direct the employer to deposit the withheld TDS and update the TDS statement accordingly. Keeping salary slips and Form 16 as evidence is essential in such cases.

Q6. How do I claim credit for TDS from previous years missed in filing? If TDS credit from a previous financial year was missed, the taxpayer can claim it in the current year’s return by including the missed income and TDS details in the Schedule TDS section of the ITR. The year in which the TDS was originally deducted must be accurately specified. If a refund is due, a condonation request under Section 119(2)(b) may also be required to enable the tax department to process it. This process ensures that legitimate TDS credits are not forfeited, even if they were not claimed earlier.

Q7. Is it necessary to check Form 26AS regularly? Yes, Form 26AS should be reviewed at least once every quarter. It acts as a consolidated statement of all tax deducted and deposited against your PAN. Regular checks help in identifying missing TDS entries, incorrect amounts, or duplicate credits early. Since this form is updated quarterly by the Income Tax Department, keeping track of it before filing ensures that all eligible credits are claimed. Ignoring it could lead to refund mismatches, tax notices, or delays in return processing.

Q8. How can I avoid penalties related to TDS mismatches? To avoid penalties, taxpayers should take a proactive approach by verifying their Form 26AS and AIS data before filing. Any mismatch should be corrected immediately through the deductor or by filing ITR-U. Maintaining updated PAN information with employers, banks, and clients also prevents reporting errors. Additionally, filing returns within prescribed deadlines and ensuring that all TDS certificates are in sync with the government records minimizes the risk of penalties under Sections 234F and 271C.

Q9. Can missed TDS entries related to bank interest be corrected in ITR? Yes, if TDS on bank interest was not reported earlier, it can be corrected either by filing a revised return (if within the due date) or by using ITR-U for late corrections. The taxpayer must include the interest income along with the TDS credit under Schedule TDS in the return. The financial year of deduction must be mentioned to ensure the system matches it with the Form 26AS records. This process helps claim refunds for overpaid taxes or missed credits accurately.

Q10. What happens if a wrong PAN is given during a bank account opening? If a wrong PAN is mentioned during account opening, the TDS deducted by the bank will not reflect in your Form 26AS, as it would have been credited to a different PAN. The immediate action should be to correct the PAN in the bank’s records and request them to file a correction statement in their TDS return (Form 26Q). Once the revised statement is filed, the TDS entry will automatically reflect in your Form 26AS. You can then claim the credit in your next ITR or through ITR-U if already filed.

Q11. Is correction of TDS possible after submitting bank account details? Yes, if you’ve already submitted your bank details but need to update TDS information, it can be corrected by filing an updated or revised ITR. Also, ensure that your PAN and KYC details are accurate in your bank’s system, as they directly impact the reporting of TDS credits. If the mismatch persists, a grievance can be raised on the TRACES portal to initiate correction from the deductor’s end. Timely action prevents complications in refund claims or tax assessments.

Q12. How to ensure TDS credit on bank fixed deposits is reflected correctly? To ensure proper TDS credit for interest earned on fixed deposits, always confirm that your PAN is linked with your bank account. At the end of the financial year, check Form 26AS and the Annual Information Statement (AIS) for the TDS amount reported by the bank. If any entry is missing, contact the bank for correction and confirm that they have filed the revised TDS statement. Filing your ITR only after cross-verifying these entries ensures that all credits are correctly claimed and refunds, if any, are processed without delays.