TDS/TCS Deadline Alert – Correction Statements Final Cut-Off

As per Section 397(3)(f) of the Income Tax Act, 2025, the Government has prescribed a final deadline for filing TDS/TCS correction statements for earlier financial years.

Affected Financial Years

• FY 2018–19 → Q4 only
• FY 2019–20 → All quarters
• FY 2020–21 → All quarters
• FY 2021–22 → All quarters
• FY 2022–23 → All quarters
• FY 2023–24 → Q1 to Q3

Immediate Action Required

If any of the following are pending, file correction statements before 31 March 2026:

• PAN errors
• Challan mismatches
• Short deduction or defaults
• Unmatched entries

Major Change in Correction Timeline

Earlier: Corrections could generally be filed within 6 years.

Now: Time limit reduced to 2 years from the date of filing the original statement.

Implications for Deductors

• Corrections must be done promptly.
• Delays beyond 2 years may make errors irreversible.
• Uncorrected defaults can lead to expense disallowance.
• Demand and penalties may be raised.
• Deductee credit mismatches may occur.

Tax Amendments 2026 – Key Highlights

Assessment / Returns / Procedure

• Sec 92CA – TPO order deadline rationalised.
• Sec 139(1) – ITR due date extended to 31 August for business/professional non-audit cases.
• Sec 139(5) – Revised return allowed till 31 March of Assessment Year; late fee u/s 234-I applicable.
• Sec 139(8A) – Updated return allowed even after Sec 148 notice.
• Sec 140B – Additional tax on updated return increased by 10% post reassessment notice.

DRP / Reassessment / Jurisdiction

• Sec 144C – DRP timelines override general limitation rules.
• New Sec 147A – Notice must be issued by jurisdictional AO.
• Sec 153 – Draft order timeline aligned with assessment limitation.
• Sec 153B – Draft order in search cases allowed till final limitation date.

Demand / Appeals / Penalty Relief

• Sec 220 – No interest on penalty demand until appellate order.
• New Sec 234-I – Late fee ₹1,000 (income ≤ ₹5L), ₹5,000 (others).
• Sec 245MA – DRC may waive imposed or imposable penalties.
• Sec 270A – No penalty if additional tax paid via updated return.
• Sec 270AA – Immunity expanded to misreporting cases.
• Sec 274 – Show cause notice mandatory; from 1-4-2027 penalty to be imposed within assessment order.

Prosecution Rationalisation

• Sec 275A – Contravention during search: simple imprisonment up to 2 years.
• Sec 275B – Obstructing inspection: up to 6 months imprisonment.
• Sec 276 – Recovery obstruction converted to simple imprisonment.

TDS / TCS Defaults – Tiered Punishment

• Sec 276B (TDS):
  • Up to ₹10L – Fine only
  • ₹10L–₹50L – Up to 6 months imprisonment / fine / both
  • Above ₹50L – Up to 2 years imprisonment / fine / both
• Sec 276BB (TCS) – Same structure.
• Sec 276C – Wilful tax evasion tiered by amount.
• Sec 276CC – Non-filing decriminalised for small cases.
• Sec 276CCC – Relaxation for search return defaults.
• Sec 276D – Special audit non-compliance up to 6 months.
• Sec 277 – False verification punishment tiered.
• Sec 277A – Falsification of books up to 2 years.
• Sec 278 – Abetment punishment tiered.
• Sec 278A – Repeat offence punishment reduced to 3 years.
• Sec 280 – Public servant disclosure offence up to 1 month.

Procedural Safeguard

• New Sec 292BA – Assessment not invalid merely due to error in quoting DIN, if otherwise identifiable.