The Income Tax Department has actually released an advisory stating that you can just submit TDS and TCS correction declarations for Q4 of FY 2018-19 to Q3 of FY 2023-24, up until March 31, 2026. If your bank, company, residential or commercial property purchaser, or anybody else subtracted the incorrect TDS or transferred the ideal TDS quantity with inaccurate information in the challan, you require to ask for a correction by March 31, 2026. After that date, you will lose your TDS credit and will need to pay tax once again. If you do not settle your tax liability, you might wind up getting a tax notification.
What did the Income Tax Department state about the TDS correction declaration?
These are the information based on the main Income Tax Advisory:
- The Income Tax Act 1961 stands rescinded w.e.f 01.04.2026 by virtue of area 536 of Income Tax Act 2025.
- Even more, according to Section 397( 3 )(f) of Income Tax Act, 2025, deductor/collector might provide a correction declaration in such type and validated in such way as might be recommended, to the recommended authority within 2 years from completion of the tax year in which such declaration is needed to be provided under the stated provisions or under area 200 of the Income-tax Act, 1961.
- Ensuing to the above, correction declarations for FY 2018-19 (Qtr. 4), FY 2019-20 to 2022-23 (Qtr. 1 to Qtr. 4) and FY 2023-24 (Qtr. 1 to Qtr. 3) will be accepted just up-to 31st March 2026. The very same are time disallowed by constraint on 31.03.2026 and would not be accepted from 01.04.2026 onwards.
- Deductors/ Collectors and other Stakeholders might kindly remember of the exact same and they are encouraged to take required actions to make sure all corrections for the above duration, if any, are performed in time as filing of the exact same for above duration would be disallowed by constraint on 31.03.2026.
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What does this mean for taxpayers?
Chartered Accountant Ashish Niraj, Partner, A S N & & Company states that every deductor of TDS is needed to provide a TDS declaration, and in some cases there are mistakes in the TDS Returns submitted which require to be fixed by method of correction declaration. Niraj states that the Section 200 of the Income Tax Act, 1961 has actually been changed by Section 397( 3 )(f) of Income Tax Act, 2025.
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Chartered Accountant Ashish Karundia discusses that from April 1, 2026, the allowable period for modifying TDS and TCS declarations under the Income-tax Act, 2025, has actually been decreased from 6 years to 2 years.
Karundia states that formerly, the six-year timeframe enabled significant retrospective modifications, typically postponing the resolution of tax credit inequalities. Under the brand-new change in TDS associated laws, any mistakes or omissions in TDS/TCS filings need to be dealt with more quickly, therefore enhancing openness and administrative effectiveness.
Karundia highlights that this modification likewise bears ramifications for the filing of Income Tax Returns, especially ITR-U, which stays readily available for 4 years.
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According to Karundia: “Given the minimized correction window, circumstances of inaccurate or non-deposit of TDS/TCS highlighted by the Central Processing Centre (CPC) systems might lead to the issuance of need notifications if disparities are not fixed within the proposed duration. Appropriately, both deductors and deductees should work out increased diligence in guaranteeing compliance within the modified statutory timelines to prevent negative repercussions such as postponed refunds, unsettled tax credit concerns, or extra tax needs.”
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Karundia suggests that TDS or TCS deductor or deductee or collectors, examine any tax needs raised for deals as much as December 2023 and start needed restorative actions on or before March 31, 2026.
