What Is The Role Of Form 26AS In Tax Compliance?

Form 26AS is a tax credit statement issued by the Income Tax Department that provides a detailed record of tax deducted at source (TDS), advance tax payments, self-assessment tax, and high-value transactions. It helps taxpayers reconcile their income and tax payments before filing their Income Tax Returns (ITR).

Key Components of Form 26AS

1. TDS and TCS Details

Shows TDS deducted by employers, banks, and other deductors.

Includes TCS (Tax Collected at Source) details from certain transactions like the sale of property or foreign remittances.

2. Advance Tax and Self-Assessment Tax Payments

Displays any advance tax or self-assessment tax paid by the taxpayer.

Helps verify if tax payments match the ITR filing.

3. Tax Refunds Received

Reflects any tax refunds issued by the Income Tax Department.

Taxpayers can check if their refunds match the claimed amount.

4. High-Value Financial Transactions

Includes high-value transactions like:

• Cash deposits above ₹10 lakh in savings accounts.
• Fixed deposit investments over ₹10 lakh.
• Credit card payments exceeding ₹2 lakh.
• Purchase of shares, mutual funds, or property above threshold limits.

Helps prevent tax evasion and ensures reporting accuracy.

5. Other Information

Includes details of demand and refund adjustments, pending tax dues, and Annual Information Statement (AIS) data.

Importance of Form 26AS in Tax Compliance

1. Ensures Accuracy in Tax Filing

Taxpayers can cross-check income and tax payments before filing ITR.

Reduces errors and mismatches in tax returns.

2. Prevents Notices and Penalties

Helps avoid discrepancies that could trigger tax scrutiny or penalties.

Ensures TDS claims match employer/bank records.

3. Assists in Loan and Credit Approvals

Many financial institutions check Form 26AS before approving loans to assess income consistency.

4. Helps Claim Tax Refunds Efficiently

Ensures correct TDS credit is received, allowing easy refund processing.

Legal Actions and Protections

Download Form 26AS from the TRACES portal via the Income Tax e-filing website.

Reconcile income, TDS, and tax payments before filing ITR to avoid mismatches.

Report any errors in TDS deduction to the deductor (employer, bank, etc.) for correction.

Example

A salaried individual finds that TDS deducted by the employer is not reflecting in Form 26AS. They should:

• Check with the employer and ensure the correct TAN and PAN details were used.
• Request the employer to file a revised TDS return to update the records.
• Wait for Form 26AS to reflect the corrected TDS before filing the ITR to prevent a mismatch.