Claiming TDS Credit: When the Numbers Do Not Match

Neeraj's Form 16 showed Rs. 82,000 TDS. His 26AS showed Rs. 72,000. Filing on Form 16 numbers gets him a notice; filing on 26AS gets him a Rs. 10,000 shortage. The right answer is neither. It is calling the payroll team and making them revise their TDS return first. Every year, 7-9% of salaried TDS returns have at least one PAN or amount mismatch. The employee pays for it until someone upstream fixes it.

By the end, you will know how to match TDS credits across Form 16, 26AS, and AIS, the correct order of operations when one disagrees, and the escalation path when the deductor is unreachable.

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Form 16 / 26AS / AIS basics

The golden rule: ITR credits = what is in 26AS

The IT department credits you ONLY what its own records (26AS, sourced from TRACES) show. If your employer deducted Rs. 1L but deposited only Rs. 92k (or quoted a wrong PAN on Rs. 8k of it), your credit is Rs. 92k. You owe the Rs. 8k difference until the deductor fixes their TDS return. This is the single most counter-intuitive rule in first-time filing: the department does not care what the employer claims; it cares what the ledger shows.

Form 16 is the employer's OWN statement about what they did. It is not authoritative. 26AS is the IT department's authoritative record, updated from quarterly TDS returns filed by every deductor. AIS is a superset. 26AS + third-party reports (dividends, mutual-fund transactions, property). The hierarchy for TDS credit: 26AS wins over Form 16, always. AIS is information-only; TDS credit comes from 26AS.

The correction sequence (5 steps)

Identify the mismatch. Compare Form 16 Part A with 26AS Part I, line by line, by quarter.
Raise it with your employer/bank in writing. Quote TDS challan number, quarter, and the specific line.
They revise their TDS return (Form 24Q for salary, 26Q for non-salary) on TRACES.
TRACES reprocesses; 26AS updates within 2-4 weeks post-revision.
Then file ITR with the corrected 26AS credit.

The sequence matters. Filing ITR with the uncorrected 26AS and planning to "fix later" via section 154 rectification puts your refund in queue for 6-12 months. Fixing upstream first takes 3-4 weeks but keeps your refund timeline clean.

Missing challan number or wrong assessment year

Common deductor mistakes: BSR code + challan serial do not match the deposit, assessment year quoted as 2024-25 when the deduction was 2023-24, employee PAN typo. Each of these breaks the 26AS credit independently. Ask for a screenshot of the TDS return status from TRACES as proof of the fix.

Escalation when the deductor is unreachable

Occasionally a deductor cannot be contacted. The company shut down, the startup laid off its entire finance team, the bank branch relocated. Raise a grievance on TRACES (resident entity) or via the e-filing portal (taxpayer grievance). The department can re-process your refund against the underlying challan if deposit is verified. This path is slow (4-9 months) but closes the loop; without it the TDS credit is permanently lost.

Do not file first and "fix later"

Rectification under section 154 for TDS mismatches is slow. Median resolution 6-9 months. File correctly the first time. The apparent inconvenience of waiting 3 weeks upfront saves months downstream.

Deductor fled / unreachable. TRACES grievance

Employer shut down, no response to emails. Raise grievance on TRACES quoting your PAN, the challan BSR + serial, and the deduction quarter. Department verifies deposit independently and credits you. The deductor's TAN goes into their delinquent list separately.

Multiple Form 16s from changing jobs mid-year

Switched jobs: two Form 16s, both TDS compliant. 26AS aggregates both. ITR line uses total 26AS TDS. Both employers' deductions sum up. The new employer may not factor old employer's salary into TDS (Form 12B from the old employer helps them), resulting in under-deduction. Net result: small additional tax owed at filing; no penalty if paid as self-assessment tax before filing.

Key Takeaways

Always reconcile Form 16, 26AS, and AIS before filing.
Credit in ITR = what is in 26AS, not what Form 16 claims.
Correction sequence: demand employer revision FIRST, then file.
Rectification post-filing under 154 is slow (6-9 months); fix upstream.
Section 205 protects you from deductor non-deposit; file a grievance to recover.