March 31, 2025, is deadline to claim pending TDS credit for these past years: Ask bank, deductor to revise TDS return

Did you ever face the situation where the bank or employer or others deducted the correct amount of TDS but somehow it failed to appear in your Form 26AS or Annual Information Statement (AIS)? One reason for this could be a mistake in the TDS return filed by the deductor i.e. bank, etc. Whatever be the case, if this TDS is not showing up in your AIS, you can’t adjust or claim it in your Income Tax Return (ITR), resulting in increased tax liability for you. So, if this is due to a mistake in the TDS return filed by the TDS deductor, you need to request the TDS deducting entity (banks, etc) to file a revised TDS return. Without filing a revised TDS return by the deductor you can’t claim the TDS in your ITR. However, in reality this is easier said than done.In the July Budget 2024 the government introduced a time limit for filing revised TDS returns by deductors. Now TDS returns can’t be revised after expiry of six years from the end of the financial year in which such a return was to be filed. So, taxpayers who were unable to claim TDS credit for FY 2007-08 to 2018-19 due to incorrect information furnished by employers banks or other deductors in their TDS returns, have time till March 31, 2025 to request for corrections of such mistakes by the deductors.

“As per amendment in section 200(3) of the Income-tax Act vide Finance Act, (No. 2) 2024, no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement referred to in sub-section (3) is required to be delivered. In view of the above, correction statements pertaining to Financial Year 2007-08 to 2018-19 shall be accepted only up to 31st March 2025. Deductors/Collectors and other Stakeholders may kindly take note, said the Income Tax Department on the TRACES portal in a news flash. TRACES portal is a portal of the income tax department for handling TDS and TCS related data.

Why is it important to get deductors to correct their TDS returns for past periods on or before March 31, 2025

Mihir Tanna, associate director, S.K Patodia LLP says one of his clients recently requested his TDS deductor to revise it’s TDS returns for previous financial years.

The client was unable to claim TDS credit because the deductor – a bank – filed it’s TDS return with the wrong PAN of the taxpayer (client). . This resulted in the taxpayer not getting the TDS credit in his AIS/Form 26AS. Years later he got a section 245 tax notice- adjustment of tax refund with past tax demand amount. When he checked it, he saw that the TDS credit was not given to him back then and all these years there had been a tax demand with interest pending against his PAN.

So, he went to the bank to request them to file a correct TDS return. However, the bank did not file it. He then filed a grievance with the income tax department. In the meantime, the interest payable on the tax demand pending against the taxpayer kept increasing due to non-payment of tax demand. However, after a few months the tax department issued a notice to the bank as to why the bank was not revising it’s TDS return due to which the taxpayer was suffering. Acting upon this notice, the bank at once filed a TDS return correction request and the taxpayer got the TDS credit. After this, the taxpayer’s section 245 notice got withdrawn and the full amount of tax refund adjusted against the tax demands were refunded. “This case proves why a taxpayer should continuously check income tax portal, follow up with department in case of error and get the TDS deducting entity to file a correction request for their TDS return to fix any past mistake. Persistence matters,” says Tanna.

Tanna says: “Taxpayers are entitled for TDS credit, if status of TDS appearing in 26AS is “F” i.e. final. So in case taxpayer don’t have TDS certificate, he/she should check 26AS for “F” status.”

Why the deadline for correcting TDS returns for specified past FYs is March 31, 2025

As per the July Budget 2024, as there was no time limit for revising a TDS and TCS statement, the opportunity may have been misused, thereby causing difficulty for deductees and collectees.

“While there is a time limit for furnishing statements detailing the TDS/TCS, however, there is no time limit for furnishing correction statements. Hence such statements may be revised multiple times indefinitely and thus these provisions may be misused causing difficulty to deductees / collectees,” said the July Budget 2024 documents.

Other updates made to the TRACES portal

The Income Tax Department’s news flash on February 5, 2025, stated that the online correction utility related to Form 24Q for the fourth quarter (Annexure-II) for FY 2024-25 has been released by TRACES. Form 24Q is used by employers deducting TDS (from salary paid to employees) to file their TDS return with the income tax department.

Moreover, a new utility version 1.6 has been rolled out for generation of Part B of Form-16. “Please download the latest utility version for Form-16 Part B,” said the Income Tax Department on the TRACES portal. Form 16 is the name of the TDS certificate given by employers to employees to certify the TDS deducted from their salaries.