- Income-tax Act, 2025 separates TDS disputes by cause, while Form No. 102 handles income taxed in a later year.
- The ordinary credit follows the year income is assessable, not simply when TDS appears in AIS or Form entries.
- Taxpayers must match the remedy to the error: rectification, revised return, special procedure, or recovery defense.
The Income-tax Act, 2025 separates TDS disputes by cause, while Form No. 102 addresses one specific mismatch: income reported in one Tax Year but tax deducted and reported in a later year. The Annual Information Statement can show the deduction, but its year of appearance does not automatically decide where credit belongs.
A taxpayer may have disclosed the income correctly and still see the credit denied after processing. Three questions determine the next step: When was the income assessable? When was tax actually deducted? Did the deductor deposit and correctly report it?
The rules apply to Tax Year 2026-27 and later periods under the new framework. A wrong PAN, a late TDS statement, a subsequent-year deduction, and a failure to deposit tax can produce similar portal results. They do not have the same remedy.
Free toolSubstantial Presence Test CalculatorThe taxpayer should also check whether credit has already been claimed in another Tax Year. Duplicate entries from corrected statements do not create a second entitlement.
The year of assessability controls the ordinary TDS credit
Sections 390(5) and (6), read with Rule 203, generally give credit to the person whose income suffered the deduction. The ordinary rule places that credit in the Tax Year when the corresponding income is assessable.
The deduction year is not always the credit year. If income becomes assessable across more than one Tax Year, the credit may need to be divided in the same proportion as the income.
The statement remains important evidence. It does not conclusively settle the legal year for credit.
Suppose professional fees of ₹10 lakh are recognised and offered in Tax Year 2026-27, but the payer deducts TDS in Tax Year 2027-28. The later appearance of the deduction does not mechanically keep the credit in Tax Year 2027-28. The special procedure is designed to align the credit with the year in which the income was offered.
That reconciliation should cover the contractual basis of the income, the accounting method, the year of accrual or receipt, the return disclosure, and the deduction and deposit dates. It should also include the deductor’s reporting and any credit claimed elsewhere.
Different TDS mismatches require different statutory routes
| Factual position | Ordinarily appropriate course |
|---|---|
| TDS deducted in the correct Tax Year but reported after processing | Correct the deductor’s statement, if necessary, then seek rectification under section 287 |
| Income offered in one Tax Year but TDS deducted and reported later | Apply under section 288(1), Table Sl. No. 11 and Rule 178 |
| Available credit omitted while the revision period remains open | File a revised return under section 263(5) |
| Available credit omitted after the revision period expires | Examine rectification under section 287 |
| TDS deducted but not deposited or correctly reported | Produce proof of deduction and invoke section 401 against direct recovery while pursuing deductor correction |
| Income taxable over several Tax Years | Allocate credit under Rule 203 |
| PAN or deductee particulars are incorrect | Obtain a corrected TDS statement from the deductor |
| Entitlement requires investigation of disputed facts | Use the appropriate assessment, appellate, or grievance route rather than relying only on rectification |
A taxpayer who forgot to claim an otherwise available credit should first examine whether a revised return remains legally permissible. An updated return is subject to restrictions, including limits on reducing tax liability or creating or increasing a refund.
Rectification handles an apparent error already visible in the record
Section 287 ordinarily suits a same-year deduction that the deductor reported after the return had been processed. The missing credit must be demonstrable from the record and must not require a fresh decision on disputed facts or law.
A rectification request should reconcile the income shown in the return, the deductor’s identity, the payment or credit date, and the amount and date of TDS. It should identify the relevant statement entry and attach or refer to the applicable certificate: Form No. 130, Form No. 131, or Form No. 132.
The taxpayer should also show how allowing the credit would change the demand or refund. A corrected statement can generate multiple entries, but those entries cannot support duplicate credit.
An order or intimation can ordinarily be amended within four years from the end of the financial year in which it was passed. When the taxpayer files the application, the authority must allow or refuse it within six months from the end of the month in which the application is received.
Rectification has a narrow scope. Disputed payments, competing Tax Years, beneficial ownership, or contested evidence may require assessment, appeal, or another grievance process instead.
The special procedure applies when deduction happens after the income year
The dedicated mechanism covers a taxpayer who included income in a return for one Tax Year, but whose TDS was deducted and paid to the Central Government in a subsequent Tax Year. The return for the year of income must already have been filed, and the taxpayer must have been unable to claim the corresponding credit in that year.
The filing conditions are:
- The later-year deduction must have been reported by the deductor.
- The application must be filed within two years from the end of the financial year in which the TDS was deducted and reported.
- The taxpayer must have a valid PAN.
- Separate filings may be made for separate valid mismatches.
- Once submitted, the form cannot subsequently be edited.
- The electronic route is
e-File → Income-tax Forms → Form No. 102.
The filing is optional. Rule 178 governs the procedure, which succeeds the earlier Form No. 71 mechanism under section 155(20) and Rule 134.
The guidance says documents are not uploaded with the form, while proof of TDS remains mandatory for validation and processing. Taxpayers should retain the certificate, statement details, payment advice, agreement, ledger, and income reconciliation for production when required.
The procedure is not a universal answer. It should not replace a deductor correction where tax was deducted in the same Tax Year, a PAN correction, or a remedy for tax that was deducted but never deposited. It also cannot create credit where tax was never deducted.
A deduction without deposit raises a separate recovery defense
Section 401 addresses direct recovery from the taxpayer when tax was actually deducted from the income but the payer failed to deposit or correctly report it. The provision protects against being made to pay the same amount again, subject to proof of the deduction.
Useful evidence may include Form No. 130, Form No. 131, or Form No. 132; salary slips or payment advice; bank statements showing the net receipt; invoices; payer confirmations; ledger accounts; correspondence acknowledging the deduction; and a later corrected statement entry.
Credit and protection against recovery remain separate questions. One concerns whether the outstanding amount can be collected from the deductee. The other concerns whether the evidence supports recording credit and issuing any resulting refund.
In Yashpal Sahni v. Rekha Hajarnavis (2007) 293 ITR 539 (Bom.), the Bombay High Court considered the predecessor section 205 of the Income-tax Act, 1961. It held that once tax had actually been deducted, the Revenue could not recover the same amount again from the employee merely because the employer failed to deposit it.
That decision binds within the Bombay High Court’s territorial jurisdiction unless displaced by higher or later binding authority. Outside that jurisdiction, it has persuasive value. Its reasoning remains relevant because section 401 carries forward the protection against direct recovery.
Older proceedings remain tied to the earlier law
The new framework took effect on 1 April 2026. Matters governed by the earlier enactment continue to be examined under the Income-tax Act, 1961, subject to repeal and savings provisions.
| Current framework | Earlier framework |
|---|---|
| Section 287 | Section 154 |
| Section 288(1), Table Sl. No. 11 | Section 155(20) |
| Sections 390(5) and (6) | Section 199 |
| Section 401 | Section 205 |
| Rule 178 | Rule 134 |
| Rule 203 | Rule 37BA |
| Form No. 102 | Form No. 71 |
| Form No. 168 | Form No. 26AS |
| Form No. 130 | Form No. 16 |
| Form No. 131 | Form No. 16A |
Form No. 26AS therefore remains relevant to proceedings governed by the earlier statute and rules. The current and former references should not be combined before identifying the law applicable to the relevant Tax Year.
A proper order should distinguish non-deduction, deduction without deposit, deposit without correct reporting, late reporting, later-year deduction, wrong-year allocation, and taxpayer omission. The conclusion that “credit is not reflected” does not address those separate situations.
As of September 2026, the framework and forms are stated to be updated through 19 September 2026. Later amendments, notifications, portal changes, and jurisdiction-specific judicial precedents should be checked before filing or applying the rules to a particular proceeding.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
