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TDS Notice

TDS Mismatch Notice: 26Q / 27Q Return vs Actual Deposits

Last reviewed: April 2026 · Sourced from official government portals

01

What Is A Tds Mismatch And Why It Happens

Your TDS return (Form 26Q for domestic non-salary payments, Form 27Q for foreign payments) declares the deductions made and deposited. The TRACES system compares this against actual challan deposits using BSR codes and challan serial numbers.

Mismatches arise when the challan details entered in the TDS return do not match the actual challan, when TDS was deposited but not linked to the correct quarter in the return, when payments were made but the TDS return was filed with incorrect PAN of the deductee, or when TDS was deducted but deposited in a different quarter than the return shows.

Source: Sections 200, 200A, Income Tax Act, 1961. TRACES processing rules.

02

How To File A Tds Correction Return

Most TDS mismatches are resolved through a correction return filing on TRACES.

  • •Log in to TRACES (tdscpc.gov.in) using your TAN credentials
  • •Download the original filed return in Justification Report format to identify exactly which entries are mismatched
  • •Prepare the correction file using your TDS software (Cleartax, TDSMAN, or Winman TDS are commonly used)
  • •Types of corrections: Challan correction (wrong BSR code or serial number), deductee PAN correction (wrong PAN entered), amount correction (wrong deduction amount), addition of new deductee entries
  • •Upload the correction file on TRACES. Processing takes 3-7 working days.
  • •After correction processing, the Justification Report should reflect the corrected position and the mismatch should close.
03

Interest That Has Been Accumulating

Beyond fixing the mismatch, check whether any interest is due:

  • •Interest for late deduction: 1% per month from due date of deduction to date of actual deduction
  • •Interest for late deposit: 1.5% per month from date of deduction to date of deposit
  • •If the mismatch is because TDS was deducted but challan was entered incorrectly: the actual deposit exists but is just linked wrong. In this case, no tax interest should arise once the correction is made.
  • •If TDS was genuinely deposited late: Interest applies and must be paid via a fresh challan. Include this challan in your correction return.
FAQ

Frequently Asked Questions

If you entered the wrong PAN, the TDS credit will not appear in that person's Form 26AS. They cannot claim the TDS against their tax liability. You must file a correction return with the correct PAN. Once processed, the credit will appear in their 26AS.

Rejection reasons are shown in the processing status. Common reasons: the original return is too old for online correction (needs to be submitted offline to the TIN facilitation centre), or there is a mismatch in the KYC details of the TAN. The TRACES helpline (1800 103 0344) can assist.

Correction returns are typically processed within 3-7 working days. Check the processing status on TRACES after this period. If the status shows "processed with defaults," review the Justification Report for remaining issues.

How we reviewed this page

The penalty amounts, deadlines, and regulatory requirements on this page are sourced directly from official government portals. We do not use secondary sources. When regulations change, we update the page.

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