Income Tax Return: How to reconcile difference in Form-16 and Form 26AS?

One of the common problems faced by the assessee while filing their Income Tax Return, whether, salaried employees or businessmen, is that TDS deducted on their income is not matching with the figures of TDS shown in form 26AS or TDS is not reflecting in form 26AS.

 In the case of salaried employees, their taxes are deducted upfront every month by the employer in the form of Tax Deducted at Source (TDS). Further, the employer is under an obligation to deposit such tax deducted within the prescribed time to the government, file quarterly TDS return for such tax deducted and deposited and issue a certificate to the employee in form 16.

On the basis of such certificate in form 16, the employee can claim credit of taxes excess deposited while filing their respective Income Tax Return in India.

Further, the tax so deposited by an employer is normally reflected on the portal of tax department in the form of form 26AS.

In case of Tax return filing of individual employees, it must be ensured that the figures in form 16 is matching with the figures in form 26AS. Any mismatch in two figures will lead to issuance of notice from tax department.

Therefore, in order to avoid notices from tax department, it is essential to understand the reasons for mismatch in form 16 and form 26AS and how to rectify or reconcile such mismatch before filing ITR.

Reasons for the mismatch between form 16 and form 26AS 

Some of the reasons for mismatch between form 16 and form 26AS are as under:

• Deductor of tax has not deposited the TDS so deducted.
• Deductor has not filed TDS return although TDS has been deposited.
• Clerical mistake in the TDS return like mentioning of wrong PAN of employee, wrong amount, wrong PAN and TAN of deductor, wrong challan identification number of TDS payment, wrong assessment year.
• Wrong TDS amount claimed in the ITR filed.

Reconciling the figures of form 16 and form 26AS 

• In case of mismatch in form 16 and form 26AS, first of all identify the reasons for such mismatch. If the mistake is on part of the employer, inform him about the mistake and ask him to rectify the mistake and file revised TDS return. On the basis of such correction, ITR filing shall be done.
• In case a notice has been issued from the Income Tax Department for TDS credit mismatch, an online reply needs to be submitted after login to the portal. The assessee can choose the option of “Taxpayer is correcting data for Tax Credit Mismatch only” and fill in the relevant details. NRI Taxation in India
  

In order to avoid legal hassles, it is advisable to do periodical checking of form 26AS to see whether TDS deducted by the employer is properly reflecting on the portal. In case it is not so reflected, an employer must be contacted immediately and reasons for such mismatch must be conveyed to employer so that he can make necessary corrections and file a revised TDS return. On the basis of reconciled figures only, an income tax return shall be filed.

Non Resident Taxation - How Residential Status of Non-Residents is determined?

 

The last year budget has provided with major changes in determining the residential status of the Non-Resident Indians or Persons of Indian Origin (PIO) for the purpose of filing NRI Income Tax Return in India.
 
These provisions have majorly impacted the residential status as well as liability of NRI Income Tax Return filing in India.  In this article, we will be discussing about changes made in definition of Non Resident Indian.

 
New Rules for determining the NRI Residential status:

1. As per provisions of the Act, a person shall be considered as Non Resident in India in case his period of stay in India during previous year is less than 182 days.  
2. Further, in case period of His stay in India during last 4 years preceding the previous year was less than 365 days and period of his stay during previous year was less than 60 days, even then, He will become Non Resident.    
3. As per Explanation (1A) to section section 6(1) which has been newly inserted, concept of deemed resident has been introduced. As per same, any citizen of India whose total income from India exceeds Rs 15 lac during the previous year shall be deemed to be Resident in India in that previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria.  

4.       Further, the definition of Not Ordinary Resident in India has also been amended. A person is said to be "not ordinarily resident" in India in any previous year if such person is--
(a)   Non-resident in India in nine out of the ten previous years preceding that year, or
(b)   Non Resident in India for more than 729 days during the seven previous years preceding that year.
(c)    A new clause (c) to section 6(1)(6) has been inserted which provides that a person shall be considered as not ordinary resident if He is an Indian citizen or a person of Indian origin and His total income from India exceeds Rs 15 lac during the previous year and his period of stay in India is 182 days or more but less than 180 days.
(d)   Further, new clause (d) to section 6(1)(6) has been inserted which provides that a person shall be considered as not ordinary resident if He a citizen of India who is deemed to be resident in India under clause (1A). 
 
It may be noted that as per the amendment in Section 6, the time period reduced to 120 days is only applicable in cases where the total accrued income in India of the visiting person in a particular financial year is more than Rs. 15 Lakhs. As was the case earlier, if a person’s total income earned in India in a fiscal year is up to Rs. 15 Lakh, they will continue to have their NRI status, even if their stay period has not exceeded 181 days.
 
The visiting Indian person is required to keep a track of all his taxable income accrued in India as well as the number of days of their stay in India. This is to be done because in case the Indian taxable income exceeds the mark of Rs.15 Lakhs, then the provisions related to stay period of more than 120 days will be applicable on them.
 
Any NRI with a stay period of 120 days or more and whose taxable income has exceeded Rs. 15 Lakhs, is required to check whether their stay period in the immediate preceding 4 years is 365 days or more. If their stay period in the preceded immediate 4 years is 365 days in total then they will be treated as a resident Indian and not NRI for the tax purposes. E assessment income tax
 
However, such individuals will be treated as Resident but Not Ordinarily Resident (RNOR) providing them with a relief that their income accrued outside India will not be taxable under Foreign Income Tax in India.
 
Why aforesaid determination of Residential status in case of Non Resident Indians is important?
 
Determination of residential status is important to correctly compute the Income Tax Liability of Non Resident and also for filing NRI Income Tax return.
 
This is due to the fact that unlike Residents, whose global income is taxable in India, in case of NRIs, only income accrued or arise or deemed to be accrued or arise and/or received in India is taxable. Therefore, in case any NRI does not have any income from India, there is no need to file NRI Tax return in India.
 
There may be situation that a person has been NRI for some years but becomes Resident in a particular year, in such case, for that year, his income from foreign country will also become taxable in India and in such case, he need to file his Income tax return from Indian as well as foreign source. However, as per DTAA applicable between both countries, he would be entitled to claim proportionate credit of taxes paid in foreign country.

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What should be done after receiving notice under Income Tax?

The Income Tax Department collects taxes on various incomes of the registered taxpayer in each financial year as per the Income Tax Act, 1961. In case of default or non-payment of income tax by the taxpayer the department serves various types of Income Tax Notice to the taxpayer. There can be many different reasons for getting notice from the Income Tax Department. In this article, we will try and understand the different types of notices that are issued to the taxpayer.

Types of Income Tax Notice:

·         Notice under Section 131(1A):

This type of Income Tax Notice is served to the taxpayer in case the assessing or proper officer suspects that the taxpayer has concealed his/ her income, this means that where it is believed that the person has hidden the total accrued income in a financial year. A taxpayer who has been served with this type of notice must gather all the sought and related documents and file the same against the reply for the notice within the deadline prescribed in the act. If the documents are incomplete the same is to be attached with an application to seek more time for collecting the relevant documents.

·         Notice under Section 139(9): 

This notice is sent to the taxpayer in case where a wrong form is filed for defective return or where the income details for the claimed refund is missing or where there are multiple numbers of mistakes and errors done in the filing. To respond to such an Income Tax Notice, the taxpayer has to file it within 15 days of the receipt of the notice. They can file the reply using the e-file option in the tax department official website.

·         Notice under Section 143(1):

This is a type of demand Income Tax Notice that is served to a taxpayer for demanding or instructing them to pay additional taxes or other levied payments required due to any calculation mistake or due to incorrect furnished information. The taxpayer shall respond to the department within 30 days of receipt of the notice. One can file the notice in the e-proceeding facility of the taxation department’s online portal.   

Related Article: How to file a reply to Income Tax Notice

·         Notice under Section 148:

An Income Tax Notice under Section 148 of the Income Tax Act, 1961 is served to the taxpayer for the purpose of reassessment in case where the proper officer has a reason to believe that the income of the taxpayer has escaped a particular assessment. Such a notice can be served by the officer for up to six years from the date of such assessment year for which the income has escaped the assessment.  The taxpayer is liable to file a return for the income that has been asked about in the notice. If the taxpayer wants to appeal against the notice then, he can ask for a copy of reasons for issuing such a notice from the taxation department.

·         Notice under Section 156:

Notice under Section 156 of the act is another type of demand notice that is sent to the taxpayers for the payment of due taxes, interests, penalty or fine that they must pay. The taxpayer must pay the dues within 30 days of receipt of the income tax notice under section 156. One can pay the dues by going to e-file facility in the tax department’s website and then click on the Respond to Outstanding Demand, to clear the due amount.