Form 26AS

Why Form 26AS is Crucial for Tax Planning

Checking tax deductions and credits is key for accurate ITR filing. Salaried taxpayers earning up to ₹12 lakh in the new tax regime can get a ₹60,000 rebate. Plus, a ₹75,000 standard deduction raises the zero-tax limit to ₹12.75 lakh.

Form 26AS helps track high-value transactions, like property sales over ₹30 lakh. This ensures compliance with Section 194IA reporting rules. Any mismatch in reported TDS/TCS could lead to a notice under Section 143(1). This means that rectifications or revised returns are needed.

Limitations of Form 26AS

Delayed updates from deductors are a challenge. TDS credits may take 4 to 6 weeks to show after quarterly filings. Also, Form 26AS captures Specified Financial Transactions (SFTs), like equity trades over ₹10 lakh. However, informal agreements, speculative transactions, or unreported cash income might not appear.

Another limitation is that capital gains tax credits under Section 112A are not part of the ₹12 lakh rebate. Taxpayers need to check gains from equity sales manually.

How to Use Form 26AS Effectively

• Pre-filing checks are vital. Compare TDS entries in Form 26AS with Form 16/16A and bank statements. A TDS mismatch, like ₹1 lakh unreported on ₹15 lakh income, could raise tax liability by ₹30,000 if not fixed.
• Resolve discrepancies quickly. If TDS mismatches exceed 10 percent of declared income, inform the deductor. They should file a revised TDS return to avoid compliance issues.
• Use the AIS for better tax tracking. Part E of the AIS shows details on high-value transactions, including crypto sales taxed at 30 percent under Section 115BBH. Monitoring these transactions ensures accurate reporting and lessens scrutiny.
• Optimise tax rebates. Under the new regime, keeping total taxable income below ₹12.75 lakh (after the standard deduction) ensures no tax liability. This makes it important to plan deductions wisely.

Final Thoughts

Form 26AS is crucial for checking tax credits, tracking high-value transactions, and avoiding audit risks. Aligning it with ITR filings and AIS records helps taxpayers avoid errors, minimise compliance risks, and speed up refund processing, which averages 93 days in FY 2024-25.