Form 16 vs Form 26AS: Key Differences & How to Match Them

Form 16 is a certificate issued to taxpayers by employers, providing details about the employee's TDS (Tax Deducted At Source) information. In contrast, Form 26AS is issued by the Income Tax Department. It gives details of the taxpayer’s advance tax payments, TDS deducted at multiple sources of income, and TCS (Tax Collected At Source) collected by different collectors. All the information related to TDS deduction by the employer in Form 16 is also available in Form 26AS. But due to specific errors of employers, there can be a discrepancy in the TDS information in Form 16 and Form 26AS. Here, we will learn more about the key differences between Form 26AS and Form 16 and how to match them. 

Before we describe the key differences between Form 16 and Form 26AS, we will briefly discuss Form 16 and Form 26AS.

What is Form 16?

Form 16, issued under section 203 of the Income Tax Act, 1961, is a TDS certificate issued by the employer to its employees as proof of deducting TDS from their salary. It contains PAN and TAN details of the employee and the employer. It also covers the employee's details regarding the salary breakup, exempted allowances, and deductions.

What is Form 26AS?

Form 26AS is a statement issued by the Income Tax Department containing all the information about the TDS deducted by the deductors and TCS collected by the collectors linked to the taxpayer's PAN details. It also includes the taxpayer’s data about tax credit and income sources. This statement helps the income tax authorities monitor the transactions linked to the assessee’s PAN details. It allows them to check if the TDS and TCS amounts align with the income from all sources. Therefore, it simplifies the Tax assessment process for the Income Tax department, ensures compliance with tax obligations and minimises tax disputes. 

Key Differences Between Form 16 and Form 26AS

How to Match Form 26AS with Form 16?

It is crucial to understand the reasons for the differences in Form 26AS and Form 16 before rectifying them. The taxpayer should consider the following points before filing an Income Tax Return. 

• Verification for the correctness of PAN details and the total TDS deducted.
• Check for the match between the salary income in Form 16 and Form 26AS. The taxpayer should pay attention to the differences in salary, perquisites, deductions and allowances.
• Check whether the TDS deducted in Form 16 matches the TDS details in Form 26AS. The taxpayer should ensure that the TDS amount deducted from the salary gets deposited with the government. If TDS gets deducted from the salary of an assessee but not deposited with the government, there will be a mismatch in the TDS amount in Form 16 and Form 26AS.
• Check for any omissions in the employer's entries. If the deductor fails to fill out some information about the TDS refund and furnish the taxpayer's correct PAN details, it may lead to unpaid taxes, which require tax payment.

Reasons for Mismatch Between Form 16 and Form 26AS

The information in Form 16 and Form 26AS is provided by two different sources: the taxpayer’s employer and the Income Tax (IT) department, respectively. There is a probability that the tax credit in your PAN (Permanent Account Number) account differs from the TDS deducted by the employer. The taxpayer’s responsibility is to identify and rectify such mismatches before filing the Income Tax Return (ITR). The reasons for the difference in data in Form 16 and Form 26AS are mentioned below:

• The deductor delayed furnishing the TDS details to the IT department.
• Incorrect PAN details in the TDS return filed by the deductor.
• Incorrect Challan details and Challan Information Number (CIN).
• Incorrect Details of an employer’s TAN and PAN.
• Furnishing of incorrect TDS amount while filing TDS return form (Form 24Q).
• Incomplete details about the taxpayer are provided in the TDS return form.

How to Resolve Mismatches Between Form 16 and Form 26AS?

If Form 16 and Form 26AS differ in information, the taxpayer should inform the employer responsible for deducting TDS about the differences. The employer will furnish a revised TDS return. If the employer fails to resolve the issue, the assessee can submit the grievance through the income tax department's e-filing portal.

If the taxpayer has claimed more TDS than what is reflected in Form 26AS, he must provide an explanation during the ITR filing. The taxpayer should also keep all the documents, such as bank statements or communications with the employer. 

Why is it Important to Match Form 16 with Form 26AS?

If Form 16 and Form 26AS do not match, the taxpayer may receive a defective return notice from the income tax authorities. He can also face severe consequences of not matching the Form 16 and Form 26AS, which are mentioned below:

Consequences of Not Fixing Differences Between Form 16 and Form 26AS

The taxpayer may have to face dire consequences if there is a mismatch between Form 16 and Form 26AS. Some of them are discussed below:

If the taxpayer's TDS has been deducted but the assessee doesn’t receive the equivalent tax credit, he must make sure that the credit is reflected in Form 26AS. Even if the taxpayer has filed the tax credit in ITR, he will not be eligible for a tax refund if it is not reflected in Form 26AS. Moreover, the IT department will issue a demand notice for underpaying taxes. Also, if an assessee has to receive a tax refund, it will be deducted to that extent.

If the taxpayer doesn’t fix the differences between Form 16 and Form 26AS, the IT department will issue a defective return notice under section 139(9) of the Income Tax Act, 1961 via email or post. The taxpayer can also view the defective return notice on the e-filing portal. 

Can you Use Form 26AS Instead of Form 16?

No, Form 26AS cannot be used in place of Form 16. The reason is that Form 26AS is a statement of all the TDS and TCS amounts deducted/collected by the deductor and collector and paid to the government.

Form 16 is issued to the employer as proof of TDS deducted and submitted to the government. If the employer deposits a lesser amount of TDS, it will be reflected in Form 26AS and added to the taxpayer's tax liability, which has already been deducted from his salary. Therefore, before using Form 26AS for filing Income Tax returns, the taxpayer must match the information in Form 16 and Form 26AS to claim the accurate tax credit amount.