Intro:
Facing TDS credit denial even when you’ve declared the income correctly and submitted valid proofs? Many Indian taxpayers struggle with this frustrating issue during ITR processing. Let’s break down why it happens and how you can fix it, based on the latest ITAT Mumbai ruling.
What Happened in This ITAT Case?
Recently, the Income Tax Appellate Tribunal (ITAT) Mumbai ruled in favour of an assessee who faced denial of TDS credit despite:
- Declaring full taxable income in ITR
- Having valid Form 16/Form 26AS evidence
- No mismatch in employer’s TDS filing
The AO had denied credit citing technical mismatch, which ITAT held as unjustified.
Legal Reference Supporting Taxpayer
- Case: ITAT Mumbai Bench
- Key Point: TDS credit cannot be denied if the assessee has filed proper documents and shown income.
- Reference: Income-tax Act, 1961 – Section 199 read with Rule 37BA.
Reasons for TDS Credit Denial
Even today, you may face TDS credit denial due to:
- Mismatch in Form 26AS vs. employer filing
- Late or wrong TDS returns by deductor
- PAN errors in TDS statement
- Technical glitches in CPC processing
How to Prevent TDS Credit Denial
Practical tips:
- Always cross-check Form 16, Form 26AS, and AIS before ITR filing.
- Rectify employer/deductor filing errors immediately.
- If credit is denied, file a rectification request (u/s 154).
- Use TRACES portal for updated TDS info.
What to Do If Credit is Still Denied?
Step-by-step guide:
1️⃣ File online rectification under Section 154.
2️⃣ If CPC doesn’t resolve, contact AO directly.
3️⃣ File a grievance on e-Nivaran.
4️⃣ If unresolved, appeal to CIT(A) or ITAT as in this case.
Expert View
“Taxpayers must verify TDS claims early. Mismatches delay refunds and may cause unnecessary litigation. Use Form 26AS and AIS as your single source of truth.” — Efiletax Expert Panel
Key Takeaway
✅ TDS credit denial despite correct income declaration is unfair if you hold valid proof. ITAT Mumbai’s ruling reinforces taxpayer rights — so don’t accept wrongful denial.
FAQ: TDS Credit Denial
Q1: Can I claim TDS if not reflected in 26AS?
Only if you have proof and the deductor rectifies it. Otherwise, credit may be denied.
Q2: How long does rectification take?
Usually within 1–2 months if documents are clear.
Q3: Can I get interest for delayed refund?
Yes, Section 244A provides for refund interest.
Facing TDS issues?
Don’t let a mismatch delay your refund. File your returns with Efiletax for smooth TDS claim support and expert help.
Summary
TDS credit denial is common when Form 26AS mismatches occur despite proper declaration. ITAT Mumbai held that denying credit in such cases violates natural justice. Taxpayers should use rectification and appeals to protect their refund rights.