Ask an Expert: How to effectively recover stuck TDS refunds with reduced TDS reconciliation time
The 26AS/Form 168 gets updated quarterly and often gets checked only during the time of ITR filing. Without sufficient time to reconcile, businesses can lose out on TDS refunds or face a higher liability due to incorrect TDS credits. Businesses can ensure their filing is problem-free and that no working capital is stuck by reconciling regularly before the ITR deadline
For insights on improper 26AS/Form 168 reconciliation and the best practices to unlock working capital, we spoke to Mugundan Anandan, Head of Product and Customer Success at Cappitall Want Network.
1. What are some reasons 26AS reconciliation breaks down when half of the work is outside your company?
26AS records transactions where your deductors have paid you after deducting tax. Errors can creep in from two directions.
The first is on the deductor's side, when miscalculations, incorrect filings, wrong PAN/TAN entries, TDS computed under the wrong section code, or simply failing to file returns or deposit tax with the government cause errors.
The second is when your finance team misses a transaction or enters it incorrectly. Any discrepancy between 26AS and your books forces your team into a tedious line-by-line reconciliation, manually tracing and mapping every mismatch.
2. What is at stake when your books and 26AS don’t match?
The biggest damages come from either having money stuck in the portal or having to pay the difference. Since the ITR filing happens after the end of the financial year, it can be easy to get swept up in filing and forget that mistakes here can hold a big chunk of money if you have a lot of deductors.
The other is, of course, increased scrutiny from income tax authorities in case of mistakes made during filing. Since TDS is a significant part of calculating tax liabilities, any distorted figures can bring attention onto your business, exposing you to more risks.
One operational difficulty that businesses internally face is sinking weeks or months into reconciliation right before the time of filing. This not only puts immense pressure on your team but also doesn’t give them enough time to follow deductors for corrections, making your reconciliation process harder.
3. What do you think businesses should look for in a reconciliation tool?
In the current landscape where taxes become more complicated—with a new Income Tax Act coming into effect with new names for everything—the core point to look for is automation.
In a complex tax scenario for companies, your team should be able to shrug off the majority of straightforward deductions and focus on edge cases or ones that require more scrutiny.
A tool that reconciles and flags all mismatches with high accuracy can help cut down on the time for reconciliation and filing. When we talk about 26AS reconciliation, it’s meant to be multi-level across PAN/TAN and the amount. Everything has to match to get perfect records.
Other features that are extremely helpful are email intimations that can be sent to customers to follow up for corrections and making sure that you can reconcile yearly and quarterly, even for previous years.
For one important scenario that was mentioned earlier, having the option to scrutinise manually while everything else is automated can save your business from having unresolved entries.
4. How does your integration with Zoho Books tackle 26AS reconciliation issues?
Our integration is built to tackle any problem you have with 26AS reconciliation. To understand better, let’s take it from how the process begins.
The auto-download feature for 26AS pulls directly from the income tax portal while our connector pulls all data from Zoho Books.
With the records ready, reconciliation runs with a click, showing you the amounts reflected in 26AS and books, the name and TAN of deductors, and when the deduction happened. This reconciliation can be run for any previous years or quarters as well, giving you flexibility across time.
PAN to TAN fetching can be used to complete details of deductors for any incomplete records.
When going through each transaction, we also provide manual pairing for any transactions that require user expertise. Automation exists to make the job easier, not to replace the judgment behind the screen.
Finally, when finding mismatches, bulk notifications—particularly ones that detail exactly which deduction has a discrepancy—can save time on drafting emails out to deductors for corrections.
Our integration works across every point of reconciliation to make the process easier and ensure that your ITR filings are error-free.
5. Do you have any best-practice tips for finance teams for this ITR filing season?
The best tip is to start reconciliation early. It takes time to pore over several spreadsheets, match with 26AS, and push for corrections.
If you were to reconcile at the last minute, your team wouldn’t have enough time to push deductors to correct and file amended returns in time. Everybody has a clock and a list of priorities.
The ideal frequency to reconcile should be every quarter when your deductors have filed their TDS returns. As your 26AS gets updated, it’s better to reconcile than to find mismatches. For CA firms that manage large clients or companies that have a lot of deductions, it’s better to reconcile more often.
A gap that often arises is incorrect details with regards to PAN/TAN. Validating those continually with every deduction and having a strong master data source will help your team become more efficient when they get into reconciliation.
The final tip is making sure that all mismatches and corrections have a proper audit trail. If an auditor questions any part of the reconciliation, having a record of all deductions and corrections can help you answer queries and withstand scrutiny.
If you are a Zoho Books user, your 26AS reconciliation doesn’t have to be an end-of-year sprint. Using the right tools can ensure that it’s done accurately in a click, make your ITR filing easier and giving you a strong record against any scrutiny by authorities.
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