Tax season just got more important—for businesses, deductors, and taxpayers. The Income Tax Department has introduced a critical update under the Income Tax Act, 2025, cutting down the window to submit corrections for TDS/TCS statements. If you miss the
deadline, you may lose tax credit or face notices. Here’s everything you need to know—clearly explained.
What Is Changing: The 2-Year TDS/TCS Correction Rule
- 1. Under the new Income Tax Act, 2025, the Income Tax Act, 1961 will be repealed effective April 1, 2026.
- 2. As per Section 397(3)(f), the time allowed for filing correction statements for TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) is now strictly within 2 years from the end of the relevant financial year.
- 3. This is a significant reduction—from a former 6-year window to just 2 years under the new law.
Who Must Act: Relevant Financial Years and Quarters
Here’s exactly which periods are affected:
- 1. Q4 of FY 2018–19
- 2. All quarters of FY 2019–20, FY 2020–21, FY 2021–22, FY 2022–23
- 3. Q1 to Q3 of FY 2023–24
Deadline for all of these: March 31, 2026. After that, no corrections will be accepted for these periods.
Why This Matters: Risks of Missing the Deadline
| Issue |
Consequence if Missed |
| Wrong PAN or incorrect challan details in TDS/TCS statements |
Deductee may lose credit, resulting in unexpected tax due or refunds delayed |
| Uncorrected errors even after reconciliation
|
Increased chances of tax notices or notices for mismatched TDS |
| Delayed correction filings
|
Accumulated workload and risk of non-compliance
|
If correction statements aren't filed by the deadline, deductees could lose TDS credits, forcing them to pay tax again or suffer penalties and notices later.
What You Need to Do: A Clear Step-by-Step Plan
- 1. Review all TDS/TCS data from Q4 FY 2018–19 to Q3 FY 2023–24
- 2. Identify mismatches—wrong PANs, challan errors, incorrect TDS sections, or amounts
- 3. Use TRACES to prepare a correction statement, validate with FVU, and submit it correctly
- 4. Inform deductees (employees, vendors, depositors) if corrections affect their tax credit
- 5. File all corrections well before March 31, 2026—avoid last-minute glitches
- 6. Maintain records of corrections filed, correspondence, and confirmation receipts
What Experts and News Reports Highlight
- 1. Economic Times warns taxpayers to use this 2-year window or risk losing tax credit or receiving notices later.
- 2. Business Today explains the legal shift—“window cut from 6 years to 2 years under the new law”—urging proactive correction filing.
- 3. Angel One reiterates that March 31, 2026, is final for resolving mismatches, or else refunds may be delayed and notices may follow.
Why You Can’t Delay
- 1. This shortened correction window emphasizes compliance efficiency—errors can no longer linger for years.
- 2. Failing to act might result in losing hard-earned TDS credits.
- 3. Both deductors and taxpayers must collaborate—deductors file corrections; taxpayers track and verify their Form 26AS or AIS.
Final Thoughts
This TDS/TCS correction deadline is more than just another date—it’s a deadline that directly affects your tax credits, returns, and reputation.
Bottom line action items for you:
- 1. Review your TDS/TCS statements for affected years
- 2. File corrections via TRACES before March 31, 2026
- 3. Notify concerned parties and keep records of submission
Need help reviewing or filing corrections smoothly? I’d be glad to assist with templates, checklists, or managing submissions—just let me know.
