tds stands for tax deducted at source. it is a tax collection mechanism. the person making a payment deducts a percentage before paying the receiver.
tds applies to salary, rent, interest, commission, professional fees, and contractual payments.
errors in tds calculation can lead to penalties, interest, delayed refunds, and scrutiny notices.
common mistakes in tds calculation
1. not deducting tds due to ignorance
many taxpayers and businesses do not deduct tds because they are unaware of the requirement. this is the most common mistake. tds applies to various payments. ignorance of the rules does not exempt liability .
2. deducting tds on the gst component
tds should be deducted on the amount excluding gst. many deductors make the error of applying tds to the total invoice value. the deduction applies to the taxable value, not the gst component .
3. applying the wrong tds rate
different payment types have different rates. for rent of land and building, the rate is 10%. for rent of plant and machinery, the rate is 2%. for contracts, the rate is 1% for individuals or hufs and 2% for others . using the wrong rate leads to incorrect tds calculation.
4. delay in deposit or return filing
tds deducted must be deposited with the government within specified timelines. quarterly tds returns must be filed on time. delay in deposit attracts interest. late filing attracts penalties.
5. incorrect pan quoted in tds return
even a single digit or alphabet in the pan can lead to a mismatch between form 16/16a and form 26as. the tds credit does not reflect in the deductee’s form 26as .
6. double standard deduction when switching jobs
under the old tax regime, every salaried employee is entitled to a standard deduction of ₹50,000 per year. when you change employers mid-year, both employers may automatically apply the full deduction. neither knows the other has done the same. this under-deducts tds. the shortfall becomes payable at filing .
7. new employer assuming lower tax bracket
your new employer only sees the salary it pays you. if you joined mid-year, that figure may fall in a lower tax slab. tds is deducted at a lower rate for the rest of the year. when both incomes are combined, the total crosses into a higher bracket. the tax shortfall becomes your liability .
8. duplicate deductions for 80c investments
section 80c deductions (up to ₹1.5 lakh), section 80d, and hra exemptions have annual caps. if you do not declare previous employment deductions, both employers may treat the limits as fully available. duplicate claims are disallowed by the income tax department. demand notices and penalties follow .
9. double-claiming tds in itr
taxpayers may claim tds from form 16/16a and form 26as separately. this results in double-claiming the same tds amount. incorrect data entry, multiple income sources, and confusion over forms lead to this error . mismatches with department records trigger scrutiny.
10. blindly trusting pre-filled itr data
the itr portal auto-populates entries from ais. mistakes still happen. if the ais shows an incorrect tds entry or an amount from an unfamiliar deductor, ignoring it leads to incorrect filing . submit feedback through the ais portal. flag the issue with reasons like “amount incorrect,” “not related to me,” or “duplicate.”
how to verify if your tds amount is correct
step one. download form 26as and ais
form 26as is the consolidated tax statement. it shows tds, tcs, and certain high-value transactions . ais (annual information statement) goes further. it includes interest from bank accounts, dividends, mutual fund redemptions, share trades, and foreign remittances . download both from the income tax e-filing portal.
step two. cross-check form 16/16a with form 26as
compare the tds details in form 16 (salary tds certificate) or form 16a (non-salary tds certificate) with form 26as. ensure the amount deducted, name of deductor, and pan match .
step three. verify through the traces portal
traces (tds reconciliation analysis and correction enabling system) is the official portal for tds management . login using your pan. check the tds statement details. the portal allows taxpayers to view tds credits, download certificates, and verify tax credit.
step four. check tds status through the e-filing portal
login to the income tax e-filing portal. go to e-file > income tax returns > view form 26as. select the relevant assessment year. download the tds statement to view deductions made against your pan .
step five. contact the deductor for corrections
if discrepancies exist, contact the employer, bank, or mutual fund house. ask them to file a corrected tds return . the correction eventually updates form 26as, which determines your tds credit.
step six. file a revised return if needed
if you have already filed your itr and notice a discrepancy, file a revised return under section 139(5) . use the corrected tds data. e-verify within 30 days.
quick summary table
| mistake | consequence | fix |
|---|---|---|
| not deducting tds | penalties, interest | understand applicability of tds rules |
| wrong tds rate | incorrect tax deducted | check rates for each payment type |
| incorrect pan in tds return | tds credit not reflected | provide correct pan to deductor |
| double standard deduction | under-deducted tds | disclose previous salary to new employer |
| duplicate 80c claims | demand notice from department | disclose all deductions claimed to new employer |
| double-claiming tds in itr | mismatch, scrutiny notice | cross-check form 26as before filing |
| ignoring ais discrepancies | incorrect filing | submit feedback on ais portal |
FAQs
1. why is my tds not reflecting in form 26as
the deductor may have failed to deposit tds on time. or there may be an incorrect pan quoted in the tds return. contact the deductor. request a revised tds return .
2. how do i check my tds amount online
login to the income tax e-filing portal. go to e-file > view form 26as. select the assessment year. download the statement .
3. what happens if tds is under-deducted
the shortfall must be paid as self-assessment tax at filing. interest at 1% per month applies if the shortfall exceeds ₹10,000 .
4. what is double-claiming of tds
claiming the same tds amount more than once in the itr. this happens when you manually enter tds details without cross-checking form 26as .
5. how do i fix tds mismatch between form 16 and form 26as
ask your employer to issue a revised form 16. if revision is not possible, file itr using salary slips and bank records. document all proofs .
