Return-processing season is when many small business owners open an intimation and see a demand they do not owe. The usual cause is a wrong or missing entry in Form 26AS or the Annual Information Statement (AIS). The fix is a fixed sequence of steps; here it is.
Key takeaway: If TDS is missing, the deductor must file a correction to its TDS return — you cannot fix it yourself. If AIS shows income that is not yours, mark it through AIS feedback. Once records are right, file a rectification request or respond to the demand on the e-filing portal. Do not ignore it: unpaid demands can be adjusted against refunds.
Which statement shows what
| Statement | Shows | Who can correct it |
|---|---|---|
| Form 26AS (TRACES) | TDS/TCS credited to your PAN, advance and self-assessment tax | The deductor or collector, through a correction statement |
| AIS | Wider data: interest, dividends, sales of shares, high-value purchases, GST turnover, TDS | You give feedback; the source confirms or corrects |
| TIS | Summary of AIS used to pre-fill your return | Updates automatically after AIS feedback |
The 5 most common wrong entries
- TDS deducted but not shown: the customer deducted TDS from your payment but filed its TDS return late, wrongly, or not at all.
- Wrong PAN: TDS went to someone else's PAN because of a typo.
- Wrong amount: ₹10,000 recorded as ₹1,000, or a quarter missing.
- Duplicate income: the same interest or sale reported twice in AIS.
- Platform TDS: e-commerce sellers see TDS under Section 194-O (0.1%) on gross sales, and suppliers of large buyers see Section 194Q (0.1%) — these must match your sales records.
Fix it in five steps
- Download Form 26AS and AIS from the e-filing portal and compare them with your books and the intimation.
- Give AIS feedback on each wrong item: Information is not fully correct, Duplicate, Not applicable, or belongs to another PAN. Keep proof.
- Ask the deductor (your customer, bank or platform) in writing to file a correction statement with the right PAN and amount. Ask for the revised TDS certificate (Form 16A).
- Check 26AS again after a few weeks. When the credit appears, file a rectification request under Section 154 on the portal so the demand is recalculated.
- Respond to the demand under Pending Actions → Response to Outstanding Demand: choose that you disagree, select the reason (for example TDS credit mismatch), and upload proof.
These return-processing steps apply to FY 2025-26 and earlier, which are still governed by the Income-tax Act, 1961, even though the new Income-tax Act, 2025 applies from tax year 2026-27.
Example
A contractor bills a company ₹5,00,000. The company deducts 2% TDS (₹10,000) under Section 194C and pays ₹4,90,000, but quotes a wrong PAN. The contractor claims ₹10,000 TDS in the return; 26AS shows nil, so the intimation raises a demand of ₹10,000 plus interest. Once the company corrects the PAN, the credit shows in 26AS, and a Section 154 rectification removes the demand.
Before you respond: pitfalls
- Paying a wrong demand "to be safe" — getting it refunded takes longer than fixing it.
- Filing a revised return when only the deductor's data is wrong — rectification is usually the right route.
- Ignoring the refund-adjustment notice — the department can set a pending demand off against your refund if you do not respond.
- Not keeping invoices and bank entries that prove the net payment you received.
Spot missing TDS early in DAM
Steps use DAM's Reports dashboard and in-app search.
- Open Search and type Reports, then open Party Statement for a customer who deducts TDS.
- Compare invoice totals with what they actually paid: the gap should equal the TDS deducted.
- Match that TDS against Form 26AS each quarter, and chase the customer early if it is missing.
Match every customer payment to its invoice
See what each party billed, paid and still owes — so missing TDS is easy to spot.
Frequently Asked Questions
Can I correct Form 26AS myself?
No. Only the deductor can correct TDS entries by filing a correction statement. You can flag errors through AIS feedback.
How do I respond to a wrong 143(1) demand?
On the e-filing portal, go to Pending Actions → Response to Outstanding Demand, choose disagree, give the reason and upload proof.
When should I file a Section 154 rectification?
After the corrected TDS appears in Form 26AS, so the department can recompute your tax and cancel the demand.
What if AIS shows income that is not mine?
Give feedback in AIS marking it as not applicable or relating to another PAN, and keep supporting documents.
Sources
Content checked on 25 October 2026. Income Tax e-filing portal · TaxBuddy: fixing TDS mismatch in Form 26AS · Angel One: responding to a Section 143(1) demand · TRACES.
Disclaimer: This guide is for educational purposes only and does not constitute formal tax, legal or financial advice. Verify with a registered Chartered Accountant (CA) before acting.