Income tax: New TDS/TCS statement correction deadline; do it now to avoid tax notice later – The Economic Times

The Income Tax Department has issued an advisory saying that you can only file TDS and TCS correction statements for Q4 of FY 2018-19 to Q3 of FY 2023-24, until March 31, 2026. So, if your bank, employer, property buyer, or anyone else deducted the wrong TDS or deposited the right TDS amount with incorrect details in the challan, you need to ask for a correction by March 31, 2026 . After that date, you will lose your TDS credit and will have to pay tax again. If you don’t settle your tax liability, you may end up receiving a tax notice.

These are the details as per the official Income Tax Advisory:

• The Income Tax Act 1961 stands repealed w.e.f 01.04.2026 by virtue of section 536 of Income Tax Act 2025.
• Further, as per Section 397(3)(f) of Income Tax Act, 2025, deductor/collector may deliver a correction statement in such form and verified in such manner as may be prescribed, to the prescribed authority within two years from the end of the tax year in which such statement is required to be delivered under the said clauses or under section 200 of the Income-tax Act, 1961.
• Consequent to the above, correction statements for FY 2018-19 (Qtr. 4), FY 2019-20 to 2022-23 (Qtr. 1 to Qtr. 4) and FY 2023-24 (Qtr. 1 to Qtr. 3) shall be accepted only up-to 31st March 2026. The same are time barred by limitation on 31.03.2026 and would not be accepted from 01.04.2026 onwards.
• Deductors /Collectors and other Stakeholders may kindly take note of the same and they are advised to take necessary steps to ensure all corrections for the above period, if any, are carried out in time as filing of the same for above period would be barred by limitation on 31.03.2026.

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What does this mean for taxpayers?

Chartered Accountant Ashish Niraj , Partner, A S N & Company says that every deductor of TDS is required to furnish a TDS statement, and sometimes there are errors in the TDS Returns filed which need to be corrected by way of correction statement. Niraj says that the Section 200 of the Income Tax Act, 1961 has been replaced by Section 397(3)(f) of Income Tax Act, 2025.

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Chartered Accountant Ashish Karundia explains that from April 1, 2026, the permissible time period for revising TDS and TCS statements under the Income-tax Act, 2025, has been reduced from six years to two years.

Karundia says that previously, the six-year timeframe allowed for substantial retrospective amendments, often delaying the resolution of tax credit mismatches. Under the new amendment in TDS related laws, any errors or omissions in TDS/TCS filings must be addressed more promptly, thereby improving transparency and administrative efficiency.

Karundia highlights that this amendment also bears implications for the filing of Income Tax Returns, particularly ITR-U, which remains available for four years.

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According to Karundia: “Given the reduced correction window, instances of incorrect or non-deposit of TDS/TCS highlighted by the Central Processing Centre (CPC) systems may result in the issuance of demand notices if discrepancies are not resolved within the prescribed period. Accordingly, both deductors and deductees must exercise heightened diligence in ensuring compliance within the revised statutory timelines to avoid adverse consequences such as delayed refunds, unresolved tax credit issues, or additional tax demands.”

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Karundia recommends that TDS or TCS deductor or deductee or collectors, review any tax demands raised for transactions up to December 2023 and initiate necessary corrective actions on or before March 31, 2026.