Income Tax Update: Don’t Miss the TDS/TCS Correction Deadline, Avoid Notices Later

The Income Tax Department has announced a March 31, 2026, deadline to file correction statements for TDS and TCS relating to FY 2018-19 Q4 through FY 2023-24 Q3. Taxpayers and deductors must act swiftly to resolve errors and avoid penalties or delayed refunds.

Correction Window Reduced to 2 Years Under New Law

The Income Tax Act, 1961, will cease to operate from April 1, 2026, with the introduction of the Income Tax Act, 2025. Under Section 397(3)(f) of the new Act, the window for filing TDS and TCS correction statements has been reduced from 6 years to 2 years, calculated from the end of the relevant financial year. Hence, March 31, 2026, is the final day to correct TDS and TCS statements from FY 2018-19 Q4 to FY 2023-24 Q3.

Implications of Missing the Correction Deadline

If your bank, employer, or property buyer deducted tax inaccurately or submitted it with incorrect challan details, and the error is not rectified by March 31, 2026, you risk losing TDS credit. This could lead to duplicate tax payments and potential tax notices. This change also affects the reconciliation of tax credits and accurate filing of ITRs, particularly where tax mismatches exist.

Who Should Take Action Now?

Entities responsible for deducting or collecting tax, such as employers, banks, or buyers, along with taxpayers, should review all TDS and TCS statements for FY 2018-19 through FY 2023-24. Any required corrections should be filed before the March 31, 2026, deadline to maintain accurate tax credits and avoid disputes or delayed refunds.

Read More: Planning to Skip ITR Filing FY25? Here’s What the IT Department Wants You to Know!

How to Rectify TDS and TCS Statements

To make corrections, authorised deductors must file a correction statement using the TRACES portal. Details must be verified and submitted according to prescribed procedures. Errors typically involve incorrect PANs, mismatched challan numbers, or wrongly mentioned TDS amounts. Timely rectification ensures proper credit to the deductee and avoids unnecessary tax burdens later.

Conclusion

As March 31, 2026, approaches, all stakeholders must ensure that TDS and TCS records from FY 2018-19 Q4 to FY 2023-24 Q3 are thoroughly checked and corrected if needed. Acting within the new 2-year window will prevent tax notices, tax credit issues, and refund delays.

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