Quick Summary
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 Proble
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Party-wise reconciliation is vital to ensure that the TDS deducted under Section 194Q, as shown in your 26AS, accurately matches the sales reported in your GSTR-1 for each specific party. This prevents mismatches that could lead to issues during tax filings and GST audits.
Section 194Q applies when a buyer purchases goods from a resident seller, and the total purchase value exceeds ₹50 lakh in a financial year. The buyer must deduct TDS at 0.1% on the payment made to the seller.
Mismatches can occur because TDS might be deducted on the invoice value including GST, while GSTR-1 reports only the taxable value excluding GST. TDS can also be deducted on advance payments, and Section 194Q only applies to the portion of purchases exceeding ₹50 lakh per buyer per year, unlike GSTR-1 which reports the full invoice value.
GST proper officers can extract B2B invoice data from GSTR-1 and compare it with TDS information, identifying these discrepancies during audits or scrutiny.
No, 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, as this provides a more accurate view of specific transactions.
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