How Income Tax Authorities Track Your Income and Taxes Paid (TDS) - Form 26 AS
Do you know that Income Tax authorities have your income data and taxes paid data even before you file your returns ? It might sound shocking at first but the fact remains -
They get all this data from various sources like - your employer, your banks, etc. Below is an example of how it works.
So now there is one more reason to be diligent and honest while filing our income tax returns. To do so, understanding of Form 26as becomes crucial because this document contains important details on taxes which have already been paid (TDS) to government on your behalf. So let us understand more about Form 26as -
What is Form 26as
Form 26as is provided by the income tax department to all tax payers. It contains -
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Details of income earned (income which is linked through your PAN number).
Examples: Salary, Pension Income, Fixed Deposit Interests etc. -
Details of all the taxes that have been paid to government on behalf of you.
Examples:-
Salary that we get in hand comes to us after our employer deducts appropriate taxes on it. These taxes are then submitted to government. This is called TDS (Tax deducted at source) and gets reported in Form 26as.
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Interest from Fixed Deposits in a particular bank, if exceeding Rs 10000/- in a year, will come to us only after the bank deducts TDS on it. This TDS is also reported in Form 26as
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So if you are a salaried employee, Form 26as will contain monthly details on the salary being paid to you and taxes deducted at source by your employer. Similarly, if you are earning interest on FDs, Form 26as will contain details on the interest being paid to you and taxes deducted at source by your bank on FD interest.
How to view Form 26as
We can view Form 26as online on the IncomeTaxIndia Website. One needs to have an account here to access Form 26as. You can register on the website by providing some basic information. After logging into the account, you will be redirected to the TDS-CPC website to view Form 26AS (Tax Credit Statement). There all you have to do is select the assessment year after which you will get to see the details about your salary, interest earned on FDs in various banks and tax deducted at source for these incomes.
How to Read Form 26AS
There are many sections in Form 26as which can appear quite confusing. But its not as difficult as it seems. Lets see -
Part A : Details of Tax Deducted at Source This is the most commonly used section. It shows details of TDS deducted from our salary and from our interest income.
Part A1: Details of Tax Deducted at Source for 15G / 15H This section shows details of such incomes which have not been taxed because you had provided Form 15G / 15H for the same. Read more on: Form 15G / 15H and how to submit them online
Part B: Details of Tax Collected at Source Tax Collected at Source (TCS) is income tax collected by seller from payer on sale of certain items which include liquor, timber, minerals, scrap, etc. So if you have not collected any tax through above then no need to see this section.
Part C: Details of Tax Paid (other than TDS or TCS) It shows details of "Advance Tax or Self Assessment Tax" which if you don't pay, you won't see any entry in this section.
Part D: Details of Paid Refund It shows details of any refund paid to you by Income Tax Department in that year.
Part E: Details of AIR Transaction It shows details of some high value transactions, such as investment in property. These high value transactions are reported to the income tax department by banks / other authorities through Annual Information Return (AIR).