Form 26AS showing wrong picture - TDS Treament

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We have one problem in Form 26AS for FY 2019-20 of one of our team members shows his client deducted and paid against his PAN but the problem is that subsequently these Invoices were revered/Credit Notes were issued by him to this client and so his client did not make any payment to him as all invoices where credit noted in client’s books of accounts. But the problem here is that the client had already deposited the TDS amount against his PAN which is being reflected in his Form 26AS Which shows wrong overall picture that these are the incomes for him from that particular client. So, do we need to show this income in his Income Tax Filling for 2019-20. Logically it should not be but if he does not show this then Income Tax Dept may find the differences between Form 26AS reported Income Vs Income Tax Fillings Declared Income and may issue a demand/show cause notice to him. There should be a logical and clear TDS Treatment/reversal process for the cases where TDS was deducted against Original Invoice. In practice is not possible to reverse the TDS once it is paid.

 

Need advice/views from the respected community members on the above topic.

 

Everyone Stay Safe and Blessed Always...Thanks

Replies (2)
Declare form 26as reported income as your total sales and claim the sales return as expenses in trading account

Solution 1) Client should file revised TDS return and use that TDS for any of his other deductions. Then form 26AS will reflect 0 values for deductee. Or show excess deduction for any of the other deductees. If that deductee has already filed his IT returns, ask him to file revised returns to claim excess TDS and take it back from him.  If this is also not possible , check TDS refund provisions.

Solution 2) If the gross amount and TDS is small amount, cancel the credit notes in client books of account (no need to file revised TDS returns) and let deductee file his IT returns as per form 26AS. Let deductee refund the said amount in FY 20-21.

Hope you understood 


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