26AS Reconciliation with Revenue Important Tasks to Avoid IT Notice
Nobody enjoys receiving a notification in their mailbox from the Income Tax office. Therefore, it becomes the ultimate responsibility of every taxpayer to pay their taxes on time. One such essential document for tax payment is Form 26AS, which we will discuss here.
The Indian Income Tax Department issues Form 26AS annually, which includes income tax paid, TDS, advance tax, and other information. It captures all taxpayer tax transactions according to department records.
Let’s get to know more about it in detail.
26AS Reconciliation: What Is It?
Form 26AS is crucial for ITR filing. Form 26AS Reconciliation involves comparing Form 26AS data to taxpayer’s financial statements. This approach helps discover anomalies in counterparties' tax deductions or collections and guarantees that the Income Tax Department appropriately registers the taxpayer's tax credit. The taxpayer must verify that Form 26AS entries belong to him and resolve any data discrepancies before submitting ITR to prevent Income Tax Department notices.
Form 26AS acts as a mirror for taxpayer tax credits. The Income Tax Department of India produces an annual statement that specifies tax deducted, collected, or paid on the taxpayer's PAN number. It also shows the taxpayer's income tax refunds for the year. Before completing their income tax return, taxpayers must balance Form 26AS to avoid incorrectly claiming tax credits, which may result in tax notifications, fines, and legal action from the tax authorities.
Procedure for Reconciliation on Form 26AS
• Tax credit verification:
The taxpayer must verify form 26AS tax credits. The taxpayer must match the tax deducted/collected with the counterparty's TDS/TCS certificate. The taxpayer's bank statement should match self-assessment tax paid.
• Refunds verification:
The taxpayer must check Form 26AS for refunds. The taxpayer should verify the refund on Form 26AS with the refund received and the tax return refund amount.
• Balancing the Financial Statements and Form 26AS:
Verifying Form 26AS tax credits with taxpayer books of accounts is necessary and complicated.
• Discrepancies Rectification:
If Form 26AS shows errors, the taxpayer must rectify their books of accounts or ask the deductor or collector to alter their TDS/TCS returns. To prevent inaccurate tax credit claims, taxpayers should submit their income tax return after reconciling 26AS and books of accounts.
Why is Ankpal the Best Option for Form 26AS Reconciliation?
Taxilla, one of the top cloud-based tax filing software for accountants, manages sophisticated and unique reconciliations, including Form 26AS, across industries. Unified RegTech Platform Ankpal automates Record, Reconcile, and Report.
Designed comprehensively for managing finances of an IT firm, Ankpal brings forth the concepts of paper-based invoicing, expense tracking, and in-depth financial reporting.
How Form 26AS simplifies Tax compliance?
• Early Error Detection:
Quickly identifying any inaccuracies in the tax credits recorded in Form 26AS is aided by the reconciliation of Form 26AS. This facilitates the correction of mistakes before the tax return filing date.
• Obtaining Correct Tax Credit:
The taxpayer may ensure their tax credit is appropriately represented in the Income Tax Department's records by reconciling Form 26AS. It assists in preventing fines or interest costs brought on by mistakes made while claiming tax credits.
• Income Tax Law Compliance:
By confirming the correctness of the tax credit, the reconciliation of Form 26AS guarantees adherence to income tax regulations.
• Quicker Processing of Refunds:
The user may submit their income tax return without making any mistakes in reporting tax credits or liabilities, making processing the return and refunds easier.
Conclusion
The taxpayer must confirm that the tax credits are accurately shown on Form 26AS; otherwise, the taxpayer risks overpaying taxes. Taxpayers may verify that they claim the right tax credits using Form 26AS reconciliation.
