What Happens If You Report TDS But Not the Corresponding Income?

Farheen Mukadam
Aug 7
8 min read

Filing your Income Tax Return (ITR) accurately is essential for compliance and to ensure that you avoid penalties or delays in receiving refunds. One of the critical components of filing your ITR is reporting Tax Deducted at Source (TDS) correctly. TDS is tax collected by the payer before disbursing payments to you, such as salary, rent, or professional fees. It is then reflected in your Form 26AS and used to calculate the total tax liability while filing the ITR. However, it is crucial to report both TDS and income properly to avoid discrepancies. Let us explore why it’s necessary to report both TDS and income, the consequences of failing to report corresponding income, how mismatches affect your refund, and how you can correct these errors. We’ll also discuss the role of TaxBuddy in simplifying this process and ensuring accurate filings.

Why is Reporting Both TDS and Income Necessary?

Reporting both Tax Deducted at Source (TDS) and income correctly is essential for ensuring that your tax filings are accurate and compliant with the law. TDS represents a portion of your income that has already been taxed at the source. It reduces your overall tax liability, but it’s only useful if reported correctly in your ITR. If you fail to report the income against which the TDS has been deducted, the Income Tax Department may view this as an underreporting of income. This could lead to penalties, interest on the unpaid tax, or even scrutiny from the tax authorities.

On the flip side, if you report the income but fail to match it with the corresponding TDS, you may overpay taxes, leading to a delay in your refund. Matching TDS with the income declared ensures that you pay the correct tax amount and receive the appropriate refund, if any.

Consequences of Failing to Report Corresponding Income

Failing to report the corresponding income for TDS can have several negative consequences. The Income Tax Department requires a matching of income and TDS to calculate the correct tax liability. If there is a mismatch, it can trigger:

Tax Notices: You may receive a notice from the Income Tax Department, asking for clarification on the mismatch between reported income and TDS deductions. This can delay your refund and require you to submit additional documentation to resolve the issue.
Penalties: If income is underreported or not reported at all, penalties may be levied. The tax authorities can impose fines for failure to disclose your income correctly, along with interest on the unpaid taxes under sections 234A, 234B, and 234C of the Income Tax Act.
Refund Delays: A mismatch between income and TDS may also delay your refund, as the department may need additional time to verify the discrepancies and process your return.

Proper reporting ensures that the tax calculation is accurate and prevents unnecessary delays or penalties.

Can You Get a TDS Refund Without Declaring the Income?

No, you cannot get a TDS refund without declaring the corresponding income. While TDS reduces your overall tax liability, you must report both the income and the TDS to ensure the refund is processed correctly. If you fail to report the income on which the TDS has been deducted, the tax authorities may not process your refund, as they will not have a complete picture of your financial situation. The refund is issued based on the total taxes paid, including the TDS amount, so failing to declare the corresponding income will prevent the refund from being processed.

In situations where the income is mistakenly omitted, you will need to file a revised return to reflect the correct income and ensure the TDS is appropriately matched. This step is essential for receiving the full benefit of the tax already paid through TDS.

How to Correct TDS and Income Mismatches in Your ITR

If you realize that there is a mismatch between the income and TDS reported on your ITR, you can correct it by filing a revised return under Section 139(5) of the Income Tax Act. The process involves the following steps:

Verify TDS Credits: Ensure that the TDS credits from Form 26AS match your income details. You can access Form 26AS from the Income Tax Department's website, which will show all TDS deductions made by the payer.
File a Revised Return: If there is a discrepancy between reported income and TDS, file a revised return by logging into your account on the Income Tax Department’s e-filing portal. You will need to select the option to revise your return and enter the corrected income and TDS details.
Attach Relevant Documents: If you’re making corrections, you may need to attach supporting documents, such as the correct TDS certificate, bank statements, or other proof of income, depending on the type of mismatch.
Recalculate Tax Liability: Once the correct income and TDS are entered, the system will automatically recalculate your tax liability. If any excess tax has been paid due to the mismatch, the system will process a refund.

Filing a revised return ensures that the mismatch is resolved, and you avoid penalties, interest, or delays in your refund.

Role of TaxBuddy in Avoiding Mismatches and Errors

TaxBuddy plays a crucial role in helping taxpayers avoid mismatches and errors when reporting income and TDS. The platform’s AI-driven system verifies the data entered and ensures that all TDS deductions are accurately reflected in the ITR. It cross-references your Form 26AS with the income you report, flagging any discrepancies before you submit your return. This proactive approach helps you file an error-free return and reduces the chances of receiving notices from the Income Tax Department.

Additionally, TaxBuddy offers expert assistance if you need help resolving mismatches or correcting errors in your return. Their team of tax professionals can guide you through the process of filing a revised return and ensuring all TDS and income details are correctly aligned.

Conclusion

Correctly reporting TDS and income is vital for a smooth tax filing process and ensures that you are not penalized for discrepancies. Failing to report the corresponding income for TDS deductions can lead to delays in refund processing, penalties, and notices from the Income Tax Department. By ensuring accuracy and using platforms like TaxBuddy, you can avoid these issues and file an error-free return. TaxBuddy’s AI-powered tools and expert assistance make it easy to verify your TDS and income, ensuring compliance and maximizing the chances of receiving your refund on time. 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: Can I amend my ITR after submitting it?

Yes, you can amend your ITR by filing a revised return. This is possible before the end of the assessment year. If you realize that you made an error or missed any income or deductions after submitting your initial return, you can submit a revised return to correct the discrepancies. It’s crucial to ensure the correction is made within the specified time frame to avoid penalties and delays in refund processing.

Q2: How do I match my TDS with the income reported in my ITR?

To ensure that your TDS is correctly matched with the income reported in your ITR, you need to verify the details on Form 26AS. This form contains all the TDS deducted on your behalf by your employer, bank, or other parties. Cross-check the amounts mentioned in Form 26AS with the TDS entries in your ITR. Any mismatch must be corrected by filing a revised return.

Q3: What happens if I don’t report the correct income for TDS?

If you fail to report the correct income for TDS, the Income Tax Department may flag your return for discrepancies. This could result in penalties, delays in processing your refund, or even a tax audit. It’s important to ensure that your TDS details match your income to avoid these complications. Any inconsistencies should be corrected immediately by filing a revised return.

Q4: Can TaxBuddy help me with TDS verification?

Yes, TaxBuddy provides comprehensive support for verifying TDS. The platform cross-checks the TDS details in your Form 26AS with the income reported in your ITR. If any discrepancies are found, TaxBuddy alerts you, helping you file a corrected return if necessary. This minimizes the chances of errors and ensures your return is processed smoothly.

Q5: What if I miss a TDS entry on my return?

If you miss a TDS entry while filing your ITR, you can file a revised return to include the missed entry. It's essential to report all TDS deductions accurately, as failing to do so could lead to penalties, delayed refunds, or notices from the tax authorities. A revised return helps you correct the mistake and avoid any further issues with your filing.

Q6: Is there a penalty for reporting incorrect TDS?

Yes, if you report incorrect TDS or fail to match your reported income with the TDS entries, you could face penalties. These penalties are levied to ensure compliance with the tax laws. Additionally, incorrect reporting could delay your refund or lead to further scrutiny from the Income Tax Department. It's vital to ensure your TDS is reported accurately in your return.

Q7: Can I get a refund if TDS is not matched with income?

You will not be able to receive a refund if there’s a mismatch between the TDS and the income reported in your ITR. The Income Tax Department processes refunds based on the accuracy of the details provided. If discrepancies exist, your return may be flagged for review, delaying your refund. To rectify this, you must file a revised return to match the TDS details with your reported income.

Q8: How can I track my refund status?

You can track the status of your refund by visiting the official Income Tax Department e-filing portal. You will need to enter your PAN and the assessment year for which you filed your return. The portal will provide real-time updates on the processing status of your refund. Alternatively, if you filed through TaxBuddy, you can track the refund status directly on the platform or get updates from the TaxBuddy support team.

Q9: What documents do I need to file a revised return?

When filing a revised return, you may need to attach updated documents such as the corrected TDS certificates, proof of income, and any other supporting documents related to the mismatch. The specific documents required depend on the nature of the error or omission in your original filing. It’s essential to gather these documents to avoid further delays in the revision process.

Q10: How long does it take to process a revised return?

The processing time for a revised return depends on the complexity of the return and the volume of returns being processed at the Income Tax Department. Generally, it may take a few weeks for the revised return to be processed. However, you can check the status of your revised return on the Income Tax portal or through TaxBuddy’s tracking system.

Q11: Can I use TaxBuddy to file a revised return?

Yes, TaxBuddy makes it easy to file a revised return. The platform guides you through the process of correcting your original filing, ensuring that all errors are addressed and that your revised return is filed correctly. TaxBuddy’s expert support is available to help you make the necessary amendments, ensuring accuracy and compliance with tax regulations.

Q12: How can I ensure my ITR is error-free?

To ensure your ITR is error-free, use TaxBuddy’s comprehensive verification tools. The platform helps verify your TDS details, match your income with TDS deductions, and ensure all documents are correctly submitted. By following these steps, you can reduce the risk of errors, minimize the need for revisions, and ensure that your return is filed accurately, ensuring a smoother processing experience and faster refund.