Mitali
Before filing Income Tax Returns, it is very important for taxpayers to carefully check documents like 26AS, AIS and TIS.
If not reconciled properly, it can lead to significant issues later such as mismatches can occur in Form 26AS under section 194Q, which many taxpayers overlook.
Mismatch Problem: 194Q TDS vs. GSTR-1 Sales
TDS under Section 194Q in 26AS
While reviewing a client's 26AS, if it shows TDS deducted u/s 194Q then it means that the another party purchased goods or services from the client and deducted TDS on the purchase value.
Section 194Q is applicable only when purchases of goods from a resident seller exceed ₹50 lakh in a financial year.
Here, buyer is required to deduct TDS at 0.1% while making a payment to the resident seller.
Reason For Mismatch
A significant issue may arise if TDS amount reflecting in 26AS u/s 194Q but does not match the sales reported in GSTR-1 for that same party. The reason may be:
Condition 1
Buyers may deduct TDS on the invoice value including GST, while GSTR-1 reports only the taxable value i.e., excluding GST.
Condition 2
TDS can also be deducted on advance payments, which may lead to higher figures in 26AS than in sales reported.
Condition 3
Mismatch arises because TDS under 194Q applies only beyond ₹50 lakh per buyer per year, while in GSTR-1 reflect the entire invoice value. This difference in scope leads to partial mismatches between 26AS and GST data.
Example:
- If a buyer purchases goods amounting ₹70 lakh in total from a seller.
- In 26AS, only ₹20 lakh is subject to TDS, so TDS appears only on that portion.
- But in GSTR-1, the seller’s sales are reported full amount i.e.,a ₹70 lakh.
GST proper officers can extract B2B invoice data from GSTR-1 and identify these discrepancies during audits or scrutiny.
So, it is crucial to perform an individual party-wise reconciliation of 194Q invoices in 26AS, rather than just matching the total 26AS sum with the Profit & Loss account
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