CBDT confirms taxpayers may use TDS deposited in FY 2025-26 for tax credit in TY 2026-27, pending update of correction facility.
TDS Deposited in Prior FY Can Be Used for New Tax Year: Income Tax Dept Clarifies
The Central Board of Direct Taxes (CBDT) has clarified that TDS challans deposited during FY 2025-26 can be applied toward tax obligations in Assessment Year 2026-27, even if incorrectly mapped in Form 26AS. This interim measure comes as the department upgrades its correction facility for TDS reconciliation.
The clarification addresses confusion arising from technical glitches in the income tax portal, where taxpayers were unable to reassign or correct TDS credits across financial years. CBDT affirmed that genuine payments will not be penalized due to systemic delays and advised assessees to maintain challan and TAN records.
For tax practitioners, this means clients should continue filing returns using available TDS credit, accompanied by a note explaining the carry-forward of payments. The ruling reduces the risk of default notices under Section 200A. However, lawyers should monitor the rollout of the updated correction utility to ensure permanent credit adjustments.
Citations
- Income Tax Act, 1961, Section 200A
