ITR Filing: Why Form 26AS is crucial for your income tax returns

One of the key digital initiatives of the tax authorities is providing Form 26AS to every taxpayer. Form 26AS is known as the annual tax return and combines all income and associated taxes for the taxpayer for a particular financial year (FY) as reported to the tax authorities.

Alok R Agrawal – Partner, Deloitte India, says, “Form 26AS has been significantly redesigned over the years. Currently, it provides details on vital aspects such as tax deducted from sources of income (salary, interest, rent, dividend, sale proceeds from home property , etc.); income where taxes are not deducted or NIL (taxpayer filed form 15H or 15G); abroad; interest on tax refunds from previous years;

Before filing an annual personal tax return, it is crucial to check Form 26AS for several reasons. Some are described below:

* Form 26AS provides all income/matching tax details at one place in a consolidated manner. Without 26AS, it will be difficult to reconcile/maintain quarterly withholding tax certificates issued by each payer separately;

* Helps ensure the completeness of tax returns by ensuring that the correct gross amounts of income from different payers are available in advance – the receipts can be in the bank account after the tax has been deducted so that the correct amount is reported;

* Helping taxpayers claim the correct amount of tax credits deducted or collected by various parties. Otherwise, this information may be spread across different credit opinions, invoices, etc.;

* Reporting based on Form 26AS ensures that the automatic processing of tax returns is not affected by mismatches;

* Incorrect reporting of income and tax data by various parties in the name of the taxpayer (e.g. tenants paying rent, employer paying salary, banks paying interest, etc.) can be reported in advance for timely correction to the respective parties;

* Ultimately, the above will reduce the likelihood of receiving unpleasant tax assessments from authorities seeking to impose additional tax/interest requirements.

As you can see above, Form 26AS is a powerful tax authority tool that simplifies the process of accurately preparing and filing tax returns. Taxpayers should take full advantage of this source of information.