Income Tax Department clarifies that TDS challans paid for incorrect assessment years can be adjusted within a ±1-year window through TRACES, subject to verification.
ITD Permits Cross-Year TDS Adjustment Within ±1 Year
The Income Tax Department has clarified that TDS challans erroneously deposited for a wrong assessment or financial year can be adjusted within a ±1-year timeframe through the TRACES portal. This administrative relief facilitates correction of mismatched TDS credits arising from clerical or data entry errors by deductors.
The facility allows taxpayers to utilise TDS credits in adjacent years, provided the relevant return has been filed and the mismatch is apparent. The adjustment must be processed through proper verification and intimation via TRACES, ensuring reconciliation between Form 26AS and taxpayer claims. However, adjustments beyond the one-year corridor require manual intervention or rectification applications.
While the measure reduces compliance friction, taxpayers must remain vigilant in reporting correct assessment years. Incorrect year declarations may still invite scrutiny if not rectified promptly. The relief is particularly beneficial for cases where deductors failed to file correct TDS returns, leading to credit denial in the intended year.
