SAG Infotech - Blog

How to Match GSTR-2B and Claim ITC for GST Compliance?

Wed, 17 Jun 2026 06:24:00 +0000

Introduction to GST Matching and ITC

In the complex world of GST, the phrase "compliance is key" holds great significance. Input Tax Credit (ITC) is crucial for businesses of all sizes, as it helps avoid the burden of paying taxes multiple times on the same product or service. However, claiming this credit is not straightforward, as it requires a detailed process of matching records. Businesses must carefully reconcile their financial records with government-reported data. This task goes beyond mere compliance; it is essential for protecting a company's revenue, maximising eligible tax credits, and avoiding potential legal issues.

Understanding GST Reconciliation

GST reconciliation is the process of verifying and comparing a business's purchase records with the details reported by its suppliers and reflected in GST returns filed with the government. This reconciliation typically involves matching data from important records such as GSTR-2B, GSTR-1, purchase registers, and tax invoices. The primary objective is to identify and rectify discrepancies, including missing invoices, incorrect tax amounts, duplicate entries, or mismatched transactions. Accurate GST reconciliation helps businesses claim the correct Input Tax Credit (ITC), maintain proper financial records, and ensure compliance with GST regulations.

When businesses claim input tax credits (ITC) on their purchases, there can sometimes be misunderstandings or issues that create gaps in the process. For instance, if a supplier fails to submit an invoice or delays filing their tax returns, it can put the buyer's ITC at risk.

According to the laws outlined in the CGST Act of 2017, a business can claim ITC only when it has physically received the goods or services, and the supplier has paid the tax to the government on behalf of the buyer. To ensure everything is in order, the supplier's tax payment is usually verified by comparing records with a report called GSTR-2B.

Understanding the Different Types of GST Reconciliation

This document provides a comprehensive reconciliation of various critical categories, with a primary focus on sales and purchase data.

Sales Reconciliation: Taxpayers can check their sales records against Form GSTR-1 to ensure that all sales are reported correctly. This helps ensure that no transaction is missed while filing GST returns.
Purchase Reconciliation: This involves matching the purchase register with Form GSTR-2B to verify the accuracy of Input Tax Credit (ITC) claims. The process helps taxpayers identify mismatches, missing invoices, or incorrect tax credits claimed in GST returns.
E-Invoice Reconciliation: This involves checking and confirming that the data reported through the e-invoice system is consistent with GSTR-1 filings and the business's books of accounts.

This provides an overview of how GSTR-2B relates to a business's purchase records. It is a critical task for any finance team, as it involves reviewing financial transactions to ensure that all records are accurately aligned. GSTR-2B is a static, auto-generated statement that provides details of the Input Tax Credit (ITC) available to a business for a specific tax period. Unlike GSTR-2A, which is dynamic and may change over time, GSTR-2B remains fixed for the relevant month. It serves as the primary reference for businesses when claiming eligible tax credits on their purchases.

Key Case Laws on the Legal Importance of ITC Claims and GST Reconciliation

Many court rulings emphasise the importance of scrutiny when it comes to claiming tax credits. In general, courts have held that the right of individuals or businesses to claim tax credits is not automatically guaranteed; rather, it is subject to the fulfilment of specific legal conditions and compliance requirements.

In the landmark case of M/s. Sadhanlal Chandra vs. Union of India (Calcutta High Court), the Court remarked that “where the supplier has failed to deposit the tax, then ITC cannot be denied to a bona fide purchaser if the purchaser can prove the genuineness of the transaction”. But this remedy is generally conditional upon the purchaser showing due diligence.

In the case of M/s. Transtonnelstroy Afcons Joint Venture v. Union of India, the Madras HC held that the responsibility for paying GST lies with the supplier, and a genuine recipient should not be penalised for the supplier’s failure to remit tax to the government. However, the Court also acknowledged the practical requirement u/s 16(2)(aa) of the CGST Act, which mandates that the relevant invoice must be reflected in GSTR-2B for the recipient to be eligible to claim ITC.

In the case of M/s. Siddhartha Tubes Ltd. v. State of Uttar Pradesh, the Allahabad High Court addressed the issue of Input Tax Credit (ITC) where suppliers had failed to file their GST returns. To protect the interests of genuine recipients, the Court directed the tax authorities to recover the outstanding tax dues from the defaulting suppliers rather than denying ITC to the recipient. This ruling highlights an important judicial trend: courts are inclined to safeguard legitimate ITC claims. However, taxpayers must maintain accurate records, perform proper reconciliations, and demonstrate that they have identified, investigated, and taken steps to resolve any discrepancies in their GST records.

In the case of M/s. D.Y. Patil College of Engineering v. State of Maharashtra, the Bombay High Court observed that tax authorities should not deny Input Tax Credit (ITC) merely on technical grounds when the underlying transaction is genuine and properly documented. At the same time, the Court emphasised that taxpayers must ensure their ITC claims are consistent with the information available in the department’s records. This ruling highlights the importance of regular GST reconciliation, as it helps taxpayers validate their claims, resolve discrepancies, and strengthen their position in the event of a tax dispute or litigation.

Step-by-Step Guide to Excel-Based GST Reconciliation

Although many sophisticated GST reconciliation software solutions are available today, Excel continues to be one of the most flexible and widely used tools for customised reconciliation. Businesses can efficiently match and analyse their data using Excel by following a structured process, such as the six-step reconciliation method illustrated in the graphical guide.

Import Data from the GST Portal: The first step in the reconciliation process is to download the GSTR-2B JSON file from the GST portal and convert or import it into an Excel format for analysis. Simultaneously, taxpayers should prepare the Purchase Register (PR) for the relevant tax period.
Normalisation: This is one of the most critical stages of the reconciliation process, as it involves cleaning and standardising data to ensure consistency across records. During this step, GSTINs should be standardised to the correct 15-character format, invoice numbers should be cleaned by removing special characters such as hyphens and slashes, and date formats should be made uniform. Proper normalisation is essential because even a single-character mismatch in an invoice number or GSTIN can result in a failed match during reconciliation.
Using Excel Functions for Data Matching: The core of the reconciliation process lies in matching datasets. Modern Excel functions, such as XLOOKUP, and older functions like VLOOKUP can be used to efficiently compare and match records. These functions help identify matching entries, discrepancies, and missing data between different datasets.

XLOOKUP: This advanced Excel function is ideal for reconciliation because it can match multiple criteria simultaneously, such as GSTIN (Goods and Services Tax Identification Number), Invoice Number, and Invoice Date.
Using IF and AND Functions for Accurate Data Matching: Useful for verifying whether the tax amount recorded in the Purchase Register (PR) matches the tax amount reflected in GSTR-2B.

Step 4: Identifying and Analysing Reconciliation Discrepancies:

Once the formulas are implemented, the discrepancies typically appear in three main categories:

Not reflected in GSTR-2B: These are invoices recorded in the Purchase Register but not appearing in GSTR-2B. This may indicate that the supplier has either not uploaded the invoice details or has failed to file the relevant GST return. As a result, the recipient may face restrictions or delays in claiming the corresponding Input Tax Credit (ITC), potentially leading to a loss of eligible tax credit.
Missing in the Purchase Register: These are invoices that appear in GSTR-2B but are not recorded in the PR. Such discrepancies may arise when purchases have been recorded in a different accounting period, omitted from the books of accounts, or incorrectly classified. They may also indicate the presence of unauthorised or potentially fraudulent invoices. Therefore, taxpayers should carefully investigate these entries before claiming ITC.
Amount Mismatch: These discrepancies arise when there is a difference between the taxable value or tax amount recorded in the Purchase Register and the details reflected in GSTR-2B. Such mismatches are commonly caused by typographical errors, incorrect invoice reporting, or data entry mistakes made by the supplier.

5. Correction and Resolution: If discrepancies are identified during the reconciliation process, taxpayers should promptly communicate with their vendors to rectify any errors or update incorrect invoice details. In cases where invoices appear in GSTR-2B but are missing from the Purchase Register (PR), taxpayers should review and update their internal accounting records accordingly.

6. Dashboard Development and Reporting: Excel's Pivot Tables and Conditional Formatting features can be used to create dynamic and interactive reconciliation dashboards. Conditional Formatting can automatically highlight unmatched records, such as by marking them in red, making discrepancies easy to identify and analyse. Meanwhile, Pivot Tables help summarise large datasets, enabling taxpayers to generate meaningful reports and gain valuable insights from their reconciliation data.

Advanced Excel Methods for Effective GST Reconciliation

Conditional Formatting: This is a powerful Excel feature that helps users visualise data quality and identify discrepancies more effectively. It can automatically highlight duplicate GSTINs, invoice numbers, or other critical fields, making it easier to detect potential errors, duplicate entries, or fraudulent transactions.
Pivot Tables: Pivot Tables are highly effective for summarising and analysing large volumes of reconciliation data. They enable users to quickly compare the total Input Tax Credit (ITC) available with the total ITC claimed, while also providing detailed breakdowns by supplier, GSTIN, document type, or tax period.
Dashboards: A centralised reconciliation dashboard provides a bird’s-eye view of your entire compliance status, delivering real-time metrics such as Total Invoices Processed, Match Percentage, and ITC at Risk.

Final Thoughts

In today's rigorous regulatory landscape, tax authorities are aggressively intensifying their scrutiny of fraudulent ITC claims and compliance deviations. In this environment, rigorous data reconciliation serves as an indispensable first line of defence. By systematically aligning the input tax credit claimed in corporate books with the eligible credit reflected in official government records.

While the GST reconciliation workflow is inherently intricate, establishing a structured process, from initial data ingestion to executive dashboard generation, makes it highly manageable and efficient. By meticulously executing a disciplined six-step verification framework and leveraging advanced data functions like XLOOKUP, enterprises can securely claim every rupee of eligible Input Tax Credit (ITC) while neutralising legal exposure. Furthermore, judicial precedents and departmental tendencies increasingly favour taxpayers who can demonstrate a robust, verifiable reconciliation trail. This proves that proactive compliance is not merely a statutory obligation, but a sound economic strategy.

In today’s regulatory environment, where tax authorities are taking stricter action against fraudulent Input Tax Credit (ITC) claims and compliance deficiencies, reconciliation serves as the first line of defence. The process involves comparing the ITC claimed by a taxpayer with the ITC available in government records, such as GSTR-2B.

AIS Mismatch Fix: Key Steps to Avoid an Income Tax Notice

Tue, 09 Jun 2026 09:43:00 +0000

Wrong Numbers in Your AIS? Steps to Correct Them

Annual Information Statement (AIS)
Taxpayer Information Summary (TIS)
Form 26AS: Your Tax Credit Statement Explained

Your Annual Information Statement (AIS) for Financial Year 2025–26 (AY 2026–27) compiles all financial transactions reported against your PAN from various sources. However, discrepancies or incorrect entries may occasionally appear in the statement. If you notice any mismatch, it is important to review and correct it promptly. This step-by-step guide will help you identify, report, and resolve AIS errors before filing your ITR, ensuring accurate tax compliance and reducing the risk of notices from the Income Tax Department.

Important Rule: If you are awaiting an AIS correction, do not delay filing your ITR. Tax experts advise taxpayers to file their returns based on verified, accurate income details currently in their possession, while pursuing AIS corrections simultaneously. Waiting for portal updates can lead to unnecessary delays, whereas filing with correct financial figures ensures timely compliance and mitigates the risk of interest or late-filing fees.

How to Log In and Check for AIS Mismatches

First, visit the IT Department’s e-Filing Portal (Web 2.0)
You can log in to the Income Tax Department's e-Filing portal at incometax.gov.in and navigate to Services → Annual Information Statement (AIS).
Select Financial Year 2025-26
Taxpayers can select the relevant financial year to view their Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) side by side.
Find out how to identify the specific error.
Check for duplicate entries, incorrect income figures, transactions linked to the wrong PAN, or amounts that do not match your financial records.
Carefully cross-check each flagged transaction against your own financial records, such as bank statements, Form 16, salary slips, and other supporting documents. This verification helps ensure that any discrepancy reported in the AIS is genuine and allows you to provide accurate feedback to the Income Tax Department.

How to Add Feedback and Select the Right Category

If you identify an incorrect entry in your AIS, locate the transaction and click on the “Add Feedback” option next to it. Then, select the feedback category that best matches your situation to report the discrepancy accurately and initiate the correction process.

The information provided is not completely accurate: Taxpayers can use this option when the reported amount is incorrect. For example, a mutual fund transaction may show the gross redemption amount in the AIS instead of the actual capital gain earned by the taxpayer.
Details of Duplicate Information: Use this option when the same transaction has been reported more than once in your AIS. For example, a bank branch and its head office may both report the same transaction, resulting in a duplicate entry. In such cases, you can submit feedback to identify the transaction as a duplicate and help ensure accurate reporting.
Information Not Related to Your PAN or Financial Year: Use this option when a transaction reported in your AIS belongs to another person or relates to a different financial year. Such discrepancies may occur due to an error made by the reporting entity while submitting information to the IT Department.
This Information Is Not Taxable: Use this category to dispute entries in your Annual Information Statement (AIS) when the reported transaction is completely exempt from tax or does not belong to you at all.

Don’t Delay Your ITR Filing While Waiting for Corrections

Do not postpone filing your Income Tax Return (ITR) while waiting for AIS feedback or corrections to be processed. Missing the prescribed filing deadline may result in late filing fees, interest liabilities, and other compliance-related consequences. Any necessary corrections can be made later.

File Using Your Actual Income Details: File your Income Tax Return based on your actual and verified income, rather than relying solely on the figures reflected in the AIS. Ensure that every income entry is supported by relevant documents such as Form 16, salary slips, bank statements, or other valid financial records.
Match Your TDS Details with Form 26AS: Form 26AS contains your finalised tax deduction details. The TDS claimed in your Income Tax Return (ITR) should exactly match the figures shown in it.

An Annual Information Statement (AIS) serves as a tool for aggregating data related to financial transactions, while Form 26AS acts as the official record for tax credits. It's important to note that these two documents can conflict with each other, and in such cases, Form 26AS should be prioritized when filing your income tax return (ITR).

How Much Time Does the Correction Process Usually Take?

Reporting entities are required to respond within a maximum of 30–39 days.

There are two outcomes: accepted or rejected feedback.

When the feedback is accepted: Your Taxpayer Information Statement (TIS) and Annual Information Statement (AIS) will be automatically updated with the corrected information. No additional action is required on the portal.
If feedback is rejected: If the reporting entity disagrees with your feedback, the correction request may be rejected. In such cases, you can contact the concerned entity directly or raise a grievance through the government portal for further review.

If you have already filed your ITR and your AIS feedback is accepted later, you may need to submit a revised return or file a rectification request under Section 154, depending on the nature of the correction.

What Is Your Master Tax Credit Document?

Form 26AS is a consolidated annual tax statement that provides a comprehensive record of your tax-related information for a financial year. It serves as the official document used by the IT Department to verify your tax credits, including TDS, TCS, and other tax payments reflected against your PAN.

Refunds received
Advance tax paid
Demand & refund info
TDS details
TCS details
Self-assessment tax
SFT transactions
Pending proceedings

The tax credit claimed in your Income Tax Return (ITR) is limited to the amount reflected in Form 26AS. You cannot claim a higher tax credit than what is recorded in Form 26AS, even if the tax has been paid.

Easy Guide to Resolving TDS or Advance Tax Mismatches

Experiencing a tax credit mismatch can be stressful, especially when the amount of Tax Deducted at Source (TDS) or advance tax reported in your Income Tax Return (ITR) does not match the figures reflected in Form 26AS. Such discrepancies often trigger a notification on the income tax portal indicating that there is a mismatch. This step-by-step guide will help you identify the cause of the discrepancy and resolve it effectively.

Addressing Tax Deduction at Source (TDS) Mismatches

If you find a mismatch in the TDS figures

Contact Your Employer or Deductor: The first step is to notify your employer or the entity responsible for deducting TDS from your income about the discrepancy. Prompt communication can help identify the cause of the mismatch and ensure that the necessary corrections are made at the earliest.
Filing a Revised TDS Return: The responsibility for correcting a TDS error lies with your employer or the deductor. They must file a revised TDS return to accurately report the tax deducted and align it with your income details. As an employee or individual taxpayer, you cannot directly rectify TDS discrepancies yourself; the correction must be made by the deductor through the revised return filing process.

Resolving Advance/Self-Assessment Tax Mismatches

If you are facing an advance tax or self-assessment tax mismatch, follow the steps below to identify the issue and resolve it effectively.

Verify the Challan Number and PAN Details: Taxpayers should carefully verify that the challan number used for advance tax or self-assessment tax payments is correct and matches the records available with the Income Tax Department. It is also important to ensure that the payment has been linked to the correct Permanent Account Number (PAN), as any discrepancy may lead to a tax credit mismatch.
Check for Intimation Under Section 143(1): If you have not yet received an intimation from the Income Tax Department under Section 143(1), which relates to the processing of your ITR, you may consider filing a revised return. This can help you correct any discrepancies in your return before the department completes its review and takes further action.

After taking the necessary steps to resolve the mismatch, it is important to verify that all tax credits are correctly aligned. The e-filing portal should display a message stating, "Tax Credit Claims are Fully Matched with Tax Credit Available in Form 26AS." This confirmation indicates that your tax credits have been successfully reconciled and that your tax records are consistent with the details available to the Income Tax Department, helping ensure smooth compliance.

Salaried Employees' AIS Correction Cheat Sheet

First, log in to the Income Tax e-filing portal and navigate to the AIS section under Services. Select the financial year 2025–26 and carefully review the entries to identify any incorrect or mismatched information.
Add Feedback: Salaried employees can select the appropriate feedback category, such as Information is Not Fully Correct, Duplicate Entry, Wrong PAN, or Not Taxable, depending on the nature of the discrepancy.
File your Income Tax Return (ITR) without delay using your actual income and tax details. Rely on documents such as Form 16, Form 26AS, and bank statements to ensure accurate reporting, rather than waiting for any pending updates or corrections.
Salaried employees may need to wait approximately 30-90 days for the reporting entity to respond to their feedback. If the feedback is accepted, the corrected information will be automatically updated in the TIS/AIS.
If required, you can file a revised return or submit a rectification request u/s 154 after the correction has been accepted, especially if you missed claiming a tax credit in your original return.

ITR 2025-26: File Only After Complete TDS Data Available

Tue, 05 May 2026 11:24:00 +0000

With the opening of Assessment Year 2025-26, the income tax return (ITR) filing window is now active, leading to a surge in early submissions by taxpayers across India. Although the filing process has become more streamlined through digital platforms, chartered accountants (CAs) advise caution, noting that filing too early may lead to avoidable errors.

A notable surge in activity has been observed, particularly among salaried individuals, many of whom are choosing to file their returns soon after the government portal went live. The Income Tax Department, through its online filing system, continues to simplify compliance by offering pre-filled forms and faster submission processes.

ITR-1 Continues to Be the Most Commonly Used Form

According to the Institute of Chartered Accountants of India, the ITR-1 (Sahaj) form continues to be the most widely used. It is designed for salaried taxpayers with relatively simple income structures, including salary income, income from a single house property, and interest earnings.

Its simple and user-friendly format makes it the preferred choice for many small taxpayers, especially salaried individuals without complex investments or multiple sources of income.

Chartered Accountants Advise Waiting for TDS Updates

Although filing is straightforward, tax professionals advise salaried individuals not to rush. The deadline for TDS returns is May 31. After this date, key documents such as Form 26AS and the Annual Information Statement (AIS) are updated in the system.

Tax professionals advise waiting until Form 26AS and AIS are fully synchronised before filing returns. Filing early can cause mismatches between reported income and tax credits, which may trigger automated notices u/s 143(1) and require a revised return. Ensuring data alignment helps avoid unnecessary corrections, extra compliance work, and potential scrutiny.

Tax practitioners note that filing an ITR before TDS/TCS data is finalised often results in corrections and the need to file a revised return. This creates additional administrative work and delays, as taxpayers must repeat the filing process once Form 26AS and the Annual Information Statement (AIS) are updated.

Why Verifying Financial Documents Is Important

Chartered Accountants emphasise the importance of conducting a thorough reconciliation process before submitting an Income Tax Return (ITR). Taxpayers are strongly advised to perform a three-way match among their key documents, such as Form 16, bank statements, and investment certificates, and the department’s digital records, including Form 26AS and the Annual Information Statement (AIS). This meticulous cross-verification helps ensure that the taxpayer’s disclosures are fully consistent with the data maintained in the tax department’s automated systems, reducing the risk of discrepancies and potential notices.

Professionals caution that errors at this stage can create discrepancies, potentially triggering notices or necessitating corrections after filing.

Learn More About the Evolving Digital Filing System

In India, the Income Tax Department’s e-filing portal has seen continuous upgrades in recent years, focusing on enhanced user-friendliness and automation. As a result, the introduction of pre-filled data, based on taxpayers’ reported income and deductions, has significantly reduced manual input and made the compliance process simpler and more efficient for many users.

As a result, many salaried individuals are now increasingly able to complete their tax filings remotely without professional assistance, especially in straightforward cases.

Benefits of Filing on Time

Filing tax returns within the designated deadlines is crucial for several reasons. While it’s important to be mindful of timing, experts highlight that adhering to these deadlines provides a range of benefits. These advantages include avoiding penalties, smoother processing of loan and visa applications, and maintaining accurate financial records, all of which can be beneficial for future financial needs.

Experts consistently stress the importance of prioritising accuracy over speed in the tax filing process. They note that filing a correct return, after gathering all necessary information, helps minimise errors, reduces the risk of complications, and ensures compliance with tax regulations.

10 Key Points on Form 121 Replacing Forms 15G/15H for Nil Tax

Wed, 22 Apr 2026 11:14:00 +0000

Under the Income Tax Act 2025, individuals whose total income falls below the basic exemption limit are exempt from tax liability. To eliminate the need for Tax Deducted at Source (TDS) on such income, the previous requirement to submit separate declarations using Form 15G or 15H has been replaced. This process has been consolidated into a new streamlined Form No. 121, which aims to reduce administrative complexity and simplify compliance for non-taxable salaried individuals.

Here are ten key points to enhance your understanding of Form 121.

Under the Income Tax Act, 2025, the earlier declarations-Forms 15G and 15H-have been merged into a new unified Form No. 121. This form acts as an important statutory declaration for taxpayers who expect their tax liability to be nil for the financial year. Ensuring accurate details in Form No. 121 is crucial for smooth communication with tax authorities and to avoid unnecessary tax deduction at source (TDS).
Form 121 is an important declaration that individuals can submit to indicate that they anticipate having no taxable income for the year. By completing this form, taxpayers formally request that no tax be withheld at the source from their payments or credits. The individual needs to provide this declaration to the relevant payer, who will then process their payments without deducting any tax, based on the information provided in Form 121.
Additionally, Form No. 121 covers various types of income, such as PF withdrawals or pension, insurance commission, rent, interest on deposits, income from mutual funds, payments related to life insurance policies, and dividends. The declarant must submit this form before the scheduled transaction date to ensure that tax is not deducted at source.
Form No. 121 serves as a unified statutory self-declaration under the IT Act, 2025, replacing the legacy Forms 15G and 15H. It is submitted by taxpayers to certify that their estimated total income for the financial year remains below the basic exemption limit. By providing this form to deductors, taxpayers can ensure that Tax Deducted at Source (TDS) is not applied to specified income streams, including interest on bank and post office deposits.
Form No. 121 is a new form that replaces the earlier Forms 15G and 15H. It can be used by all individual taxpayers, including those below 60 years of age as well as senior citizens aged 60 or above, to submit a declaration for avoiding tax deduction at source (TDS) on eligible income. However, non-residents are not eligible to file this form.
Form No. 121 acts as a statutory self-declaration for taxpayers seeking exemption from Tax Deducted at Source (TDS). To be eligible, taxpayers must reasonably expect that their total income for the financial year will remain below the basic exemption limit, resulting in nil tax liability. A fresh declaration in Form No. 121 must be submitted for each assessment year to continue availing the TDS exemption.
Quoting the Permanent Account Number (PAN) is mandatory when submitting the declaration in Part A of Form No. 121 by the declarant. If the PAN is not provided, the declaration becomes invalid, and the payer is required to deduct tax at source (TDS) at the applicable rate under the Income Tax Act, 2025. Part A of Form 121 must be filled out and signed by the declarant, while Part B is to be completed by the payer to acknowledge the declaration and record the details of the credit or payment.
The declarant may submit the declaration to the payer either in physical form or electronically, provided the payer offers such a facility. This can be done through a regional office or a designated digital platform.
Each Form No. 121 received must be assigned a Unique Identification Number (UIN). This UIN is a composite string that includes the sequence number, the relevant assessment year, and the Tax Deduction and Collection Account Number (TAN) of the payer. Additionally, payers are legally required to upload a consolidated statement of all declarations received during the month via the e-filing portal by the 7th day of the following month. To maintain data integrity, these UINs must be accurately cross-referenced in the Quarterly TDS Statement (Form No. 140).
Physically signed Form No. 121 declarations submitted by taxpayers can be used to prepare the consolidated statement for monthly uploads on the Income Tax Department’s e-filing portal, as well as for reporting in the Quarterly TDS return.

Important: Return Preparation & File Validation Utility vs TDS Software

Important Note

This article serves as a source of information and should not be considered professional tax advice. It is important to recognise that tax laws and regulations can change frequently due to government actions. We recommend that readers confirm the information through official notifications from the Income Tax Department or seek guidance from a Chartered Accountant (CA) prior to making any financial decisions. The Financial Express disclaims any responsibility for decisions made based on the information provided in this article.

Tax Filing: ITR-1 to ITR 7 Forms Released for AY 2026-27

Tue, 31 Mar 2026 11:48:00 +0000

On March 30, 2026, the Indian government introduced new Income Tax Return (ITR) forms, specifically ITR-1 through ITR-7, for the Assessment Year 2026–27.

These forms are available for various categories of taxpayers, including individuals, pensioners, and professionals. Taxpayers are encouraged to use the relevant forms to submit their returns by the deadline of July 31, 2026.

Chartered Accountant Ashish Niraj, a partner at A S N and Company, shared with ET Wealth Online an important update regarding the Income Tax Return (ITR) forms. One significant change in the ITR-1 form is the allowance for reporting income from up to two house properties.

In the past, taxpayers could only report income from a single property using ITR-1, which required those with multiple properties to file the more complex ITR-2 or ITR-3 forms. This update simplifies the filing process, making it easier for taxpayers to report their income from additional properties through the more straightforward ITR-1 form.

Who Is Eligible to File ITR-1?

Let’s look at some key types of income that cannot be reported in the Income Tax Return (ITR-1) form.

For example, income from business or professional activities.
Income from Short-Term Capital Gains
Income from long-term capital gains under Section 112A above ₹1.25 lakh.
Income from more than one residential property
Income falling under the head “Other Sources” in the following categories:
(i) Income from Lottery Winnings
(ii) Racehorse Ownership and Maintenance Activities
(iii) Income falling under special taxation provisions of Sections 115BBDA or 115BBE.
(iv) Income required to be apportioned as per Section 5A provisions.

Who Can File ITR-2?

ITR-2 can be filed by individuals or Hindu Undivided Families (HUFs) who

Who Are Not Eligible for ITR-1 (Sahaj)?
In situations where taxpayers do not earn income from business or professional activities, as well as from any associated profits and gains, it is important to understand the implications for their tax obligations.
interest
salary
Bonus
Any commission or remuneration, regardless of its designation, received or receivable from a partnership firm.
Have income of another person, such as a spouse or minor child, that is required to be clubbed with their income, if such income falls under any of the above categories.

Who Cannot File ITR-2?

Individuals and Hindu Undivided Families (HUFs) cannot use Form ITR-2 to file their income tax return if their total income includes profits and gains derived from a business or profession. Additionally, this form is not applicable to the income of certain specified categories.
Interest
salary
bonus
Any commission or payment, regardless of its name, received or receivable from a partnership firm.

Income-Tax Forms Set for Revision Under Draft Rules 2026

Wed, 18 Feb 2026 04:56:00 +0000

The draft Income-tax Rules for 2026 introduce several income-tax forms that were previously outlined under the Income-tax Rules of 1962. Although the majority of these forms maintain their original numbering and descriptions, the references to sections have been updated to correspond with the provisions of the Income-tax Act, 2025. Additionally, the draft includes several new forms aimed at addressing key areas, along with significant revisions to existing forms.

Understanding Tax Audit

Forms 3CA, 3CB, and 3CD are essential documents that function as the audit report and the statement of particulars that must be provided. These forms play a critical role in ensuring compliance with regulatory requirements.

Previously, these forms were mandated under Section 44AB of the Act.
According to the proposed regulations, it is essential to provide the same audit report as mandated by Section 63 of the Act.

TDS Returns Filing

Form 24Q plays a crucial role as the quarterly statement used for reporting tax deducted at source on employee salaries. This form is essential for employers to accurately disclose the amount of tax withheld from their employees' earnings.

The matter was previously documented under Section 200(3) of the Act.
According to the updated regulations, it is now mandatory to submit filings under Section 397(3) of the Act.

Form 26Q continues to serve as the quarterly statement for reporting tax deducted at source on payments other than salary, with the section reference now updated to Section 397(3)(b) of the Act.

Understanding Foreign Remittance

Form 15CA is an important declaration that individuals and entities must submit for any payments made to non-residents.

Form 15CB serves as an essential accountant's certificate for facilitating payments made to non-residents.
Certain forms continue to remain applicable under the proposed rules.

How Foreign Tax Credit Works

Form 67 is an important document used for reporting income earned from foreign countries or specified territories outside of India. It also serves as a means for taxpayers to claim the Foreign Tax Credit. This form helps individuals ensure compliance with tax regulations while optimising their tax benefits.

A new procedure has been introduced to communicate the resolution of disputes regarding foreign taxes for which credits have yet to be claimed.

Contributions

Form 10BD is an essential document that serves as the statement, or correction statement, required to be filed by the donee.

Form 10BE continues to serve as the certificate of donation.
The proposed rules align these forms with Section 354 of the Act.

Permanent Account Number (PAN)

Forms 49A and 49AA remain the designated applications for obtaining a Permanent Account Number (PAN) in India. There have been no alterations to their format or intended use, ensuring that individuals can continue to rely on these forms for their PAN allotment needs.

Tax Assessment of Fair Value

The proposed rules introduce new forms for both the application process to register as a valuer and for the reporting of asset valuations. These specific forms were not previously established, aiming to streamline and standardise the registration and reporting processes in the valuation field.

The Income Tax Department has officially opened a consultative window, inviting stakeholders to provide strategic inputs and feedback on the Draft Rules and statutory forms under the Income Tax Act, 2025. With this landmark legislation scheduled for implementation on April 1, 2026, the consultation offers professionals a crucial opportunity to help shape the procedural framework of India’s modernised tax ecosystem.

Also Read: How Income Tax Software Companies Should Prepare for Act 2025

In an effort to enhance stakeholder engagement, the draft Income-tax Rules, 2026, along with the associated forms, have been made available on the official website of the Income Tax Department ahead of their official notification. This initiative aims to encourage broader participation in the consultation process.

A new utility is now available on the e-filing portal, allowing stakeholders to submit their feedback. This feature has been live and accessible to all users since February 4, 2026.

Major New Tax Rule Changes for Taxpayers from April 2026

Fri, 09 Jan 2026 10:17:00 +0000

India is preparing for a landmark shift in its fiscal landscape with the introduction of the Income Tax Act, 2025, set to take effect on April 1, 2026. This new legislation will replace the legacy Income Tax Act of 1961, which has governed the country’s taxation framework for over six decades. The reform aims to modernise tax administration, simplify compliance, and align India’s tax system with the demands of a contemporary economy.

Tax professionals strongly advise taxpayers to familiarise themselves with these legislative changes in advance. Early engagement with the new framework is essential to ensure a smooth transition and to minimise compliance-related confusion once the law officially takes effect.

The New Income Tax Law Explained

Over time, the current tax law has grown increasingly complex due to frequent amendments, clarifications, and exceptions. The new Act aims to streamline this by presenting the law in clear, simple language and modernising procedures to align with today’s financial practices.

While the core framework of income tax remains unchanged, the new law emphasises simpler compliance, reduced disputes, and greater integration of technology.

Key Regulatory Changes in the New Income Tax Law for Taxpayers

The Income Tax Act, 2025 introduces updated rules, processes, and formats designed to simplify filing and compliance. Its goal is to reduce ambiguity and help taxpayers better understand their obligations.

According to tax officials, the new legislation places strong emphasis on clarity and administrative simplicity. By streamlining complex provisions, the law aims to improve ease of doing business, especially for individual taxpayers and small enterprises, ensuring a more transparent and user-friendly compliance ecosystem.

Important Modifications That Every Taxpayer Should Know

Updated Procedures and Filing Forms: The Central Board of Direct Taxes (CBDT) is implementing updated procedures and forms under the new Income Tax Law. As a result, taxpayers may need to follow revised formats when filing income tax returns, responding to notices, or completing other tax-related tasks.

These updates are expected to be introduced gradually, with new procedures and forms announced through official notifications.

Prioritising Guidance Over Pure Enforcement: The Income Tax Department is placing a greater emphasis on promoting voluntary compliance among taxpayers. A significant initiative that supports this strategy is the NUDGE framework, which stands for Non-intrusive Usage of Data to Guide and Enable. This framework leverages data-driven insights to offer gentle guidance to taxpayers, moving away from strict enforcement measures and fostering a cooperative approach to tax compliance.

The objective is to prevent errors before they occur and minimise unnecessary litigation.

Greater use of technology: Under the new Act, technology will play a much larger role, with legal backing for digital systems in assessments, data matching, and official communication.

Taxpayers should anticipate modifications in the procedures for issuing notices, submitting responses, and verifying information. The shift towards greater automation is expected to minimise manual intervention, thereby expediting the decision-making process.

How Taxpayers Should Prepare

It is essential for taxpayers to stay informed by regularly checking for official updates from the Income Tax Department and the Central Board of Direct Taxes (CBDT). In the upcoming months, notifications regarding new forms, procedures, and timelines will be particularly important.

With greater digital verification, it is essential to keep financial records well organised. Bank statements, investment proofs, income details, and tax documents should be readily accessible.

When taxpayers face uncertainty regarding exemptions, deductions, or reporting requirements, it is advisable to seek guidance from tax advisors or refer to official guidance provided by the relevant department. This can help ensure compliance and clarity in tax matters.

The new Income Tax Act is designed to simplify the tax compliance process, making it less burdensome for taxpayers. As the effective date approaches on April 1, 2026, it will be important for taxpayers to stay informed and prepared to ensure a smooth transition to the new regulations.

How to Respond to IT Dept Nudge Intimations on ITR–AIS Mismatch

Tue, 16 Dec 2025 10:30:00 +0000

The Income Tax (IT) Department has deployed data-driven compliance tools and intensified its use of ‘nudge’ notifications. These automated alerts are sent to taxpayers when discrepancies are detected between the income reported in their Income Tax Return (ITR) and the information available in their Annual Information Statement (AIS).

Chartered Accountant Ajay Konale highlights an important scenario regarding tax compliance: a taxpayer received a notification concerning the acquisition of immovable property valued at approximately ₹2.28 crore for the Financial Year 2024-25.

This transaction was noted in the Annual Information Statement (AIS) and was found to be inconsistent with the income reported in the taxpayer's Income Tax Return (ITR). As a result, the taxpayer was advised to review the details of the transaction, address the discrepancies, and consider revising their ITR for Assessment Year 2025-26 if necessary.

In cases involving high-value transactions, such as the acquisition of immovable property, a notification is typically issued. The primary concern in these situations is that the recorded transaction value appears to be inconsistent with the income reported by the taxpayer in their tax return.

Chartered Accountant Ajay Konale explained that the ‘nudge’ notifications issued to taxpayers should not be confused with scrutiny notices or formal assessment orders. These notifications act as a non-intrusive, preventive compliance tool, giving taxpayers an early opportunity to correct genuine mistakes or clarify discrepancies in their filings.

He emphasised that responding promptly to these notifications is generally seen as an effort to rectify errors, whereas failing to address them may later be interpreted as a deliberate attempt to conceal or misreport information.

The Central Board of Direct Taxes (CBDT) has launched a focused initiative known as the ‘NUDGE’ campaign, aimed at addressing fraudulent claims related to deductions and exemptions. This campaign specifically targets suspicious donation claims filed under Sections 80G and 80GGC of the Income Tax Act.

Following comprehensive data analysis and the identification of unusual patterns, the CBDT has begun sending advisories via SMS and email to taxpayers flagged as high-risk cases. This outreach effort commenced on December 12, 2025, as part of the CBDT’s commitment to enhancing compliance and preventing tax evasion.

What do Taxpayers Need to Do?

Taxpayers who receive a nudge intimation are advised to log in to the Income Tax e-filing portal to review their Annual Information Statement (AIS) in detail. It is important to reconcile each entry in the AIS with the income and transactions reported in the Income Tax Return (ITR) to pinpoint any discrepancies or mismatches. This process will help ensure that all information is accurate and up-to-date.

Taxpayers are encouraged to carefully evaluate the accuracy of the data presented in their Annual Information Statement (AIS). If the AIS information is accurate but has been overlooked or inaccurately reported in the original tax return, taxpayers should take the necessary steps to file a revised return by December 31st of the applicable assessment year.

On the other hand, if the AIS data is found to be incorrect or only partially accurate, taxpayers should provide feedback directly within the AIS section. This feedback can consist of accepting, partially accepting, or disputing the information, and it should include clear explanations for any discrepancies noted.

When preparing for potential scrutiny regarding high-value transactions or deduction claims, it's essential for taxpayers to keep supporting documentation readily available. This documentation should include important proof, such as loan details, ownership records for properties, and evidence of legitimate donations. Additionally, it's crucial to ensure that your mobile number and email ID are correctly updated on the tax portal. This will help you receive all important communications from the tax authorities.

The Central Board of Direct Taxes (CBDT) has described the campaign as a beneficial initiative for taxpayers. This program aims to promote voluntary correction of errors in tax filings prior to the commencement of more stringent enforcement measures.

Mistakes Taxpayers Must Avoid During GST Online Verification on the Portal

Thu, 04 Dec 2025 11:18:00 +0000

Tax law is essential to India’s financial ecosystem, particularly for businesses that depend on accurate compliance to maintain proper records and avoid unnecessary notices. Errors in GST online verification can cause confusion, failed vendor validations, and filing delays. Taxpayers often rush the process and miss important details. Even minor issues, such as mismatched legal names or outdated registration information, can disrupt business operations.

This blog post highlights common mistakes to avoid and offers practical solutions to ensure smooth and reliable GST verification. The aim is to help traders, retailers, distributors, and service providers complete the verification process with confidence while remaining fully compliant with GST rules applicable in their respective states.

Checklist of GST Online Mistakes Taxpayers Must Avoid

In today’s digital environment, many businesses fail to perform basic checks while validating their suppliers, which often leads to issues during audits and monthly return filings. Some common errors are outlined below.

Entering supplier details regarding using outdated or incorrect legal names.
Not checking the status code on the portal before issuing invoices.
Entering incorrect state codes during purchase entries.
Not validating the GSTIN format before saving it in accounting software.

A Surat-based textile unit continued transactions with a partner whose GST registration had become inactive. The issue was discovered only during a departmental inquiry, causing unnecessary stress. A careful review of all details beforehand could have prevented this problem.

Why Overlooking Government Portal Status Can Severely Impact Compliance Signals

Failing to Verify the Latest Status

Real-time status updates on the GST portal are vital for staying compliant. Yet, many tax professionals zero in on the GSTIN and miss the activity flag. When verifying, taxpayers can easily overlook key details like:

Suppliers receive notices directly through the portal.
Remarks from the website moderator, such as suspended or flagged comments.
If there are dues to be paid for the records, the registration can be canceled.
A record of filed returns and any delays, as displayed on the dashboard.

A supplier based in Pune continued to receive repeated orders from a wholesale grocery dealer despite having their GST registration cancelled. The dealer placed these orders based on outdated information saved months earlier, without verifying the supplier’s current GST status. This situation highlights the risks of relying on old data, which can lead to non-compliant transactions and potential input tax credit issues. To prevent such problems, businesses should always check the GST portal for the latest registration status of suppliers before placing any major order.

Skipping Location and Activity Checks

GST verification is not limited to checking the validity of the GSTIN. Taxpayers should also ensure that the supplier’s declared nature of business aligns with the specific goods or services being procured. Engaging with a supplier whose GST registration does not cover the relevant goods or services may result in denial of input tax credit and potential compliance issues. Therefore, a thorough review of the supplier’s GST details on the portal is essential before finalizing significant transactions.

The invoice does not align with the business activity declared on the GST portal.
The invoice shows a location different from the principal place of business.
It has been observed that large distributors frequently fail to register their additional places of business.
The Harmonized System of Nomenclature (HSN) or Services Accounting Codes (SAC) mentioned do not match the goods or services being billed.

A Chennai electronics dealership faced an Input Tax Credit (ITC) blocking issue because their supplier's registered field of activity bore no relation to the electronic items being sold. A brief, simple review of the supplier's registered business activities would have prevented this critical mismatch.

PAN Records Not Matching Correctly

Many taxpayers rely on GSTINs obtained through verbal communication or old purchase bills without proper validation. As a result, they fail to conduct thorough checks during verification, leading to several important details being overlooked, such as:

Always Check if the GSTIN Prefix Corresponds to the Entity's PAN
A common data entry error is the misspelling of the supplier's legal name when recording transactions or details.
A common cause of filing mismatches occurs when an entity’s trade name is mistakenly used instead of its legally registered name in records.
The Misrepresentation of Temporary IDs and Registrations as Valid GSTINs

Reconciliation issues often stem from small but critical errors, such as spelling mistakes. For example, a furniture retailer in Nagpur faced return mismatches and the risk of notices because a single spelling error in a supplier’s legal name was repeated across multiple entries. Correcting that one error promptly resolved the entire issue.

Final Confirmation on the Circumstances for Not Using the GST Portal

Due to the verification complexities, many taxpayers rely entirely on screenshots provided by vendors or accountants, significantly increasing the potential for human error and data inaccuracy.

Data may be outdated.
GST Portal Updates are Not Consistent in Older Screenshots
Incorrect assumptions may be made because of partial visibility.
The historical compliance notes are hidden within screenshots.

A chemical distributor in Vadodara was misled by a screenshot showing a supplier’s GST status as “Active.” However, the official GST portal had already marked the supplier as “Suspended” due to non-filing. This incident highlights the importance of relying on direct, real-time portal verification for accurate compliance data.

The Risk of Failing to Carefully Check Address Details

Small address-level errors often go unnoticed, but they can turn into major issues during assessments or cross-verification. Some common address-related mistakes include:

Mismatch Between Registered State and Utilized State Code
Entering Branch Office Details Where Main Office Information is Required
Missing Unit Numbers in Documentation for Multi-Warehouse Setups
Overlooking Additional Places of Business in Compliance Documentation

A courier partner in Hyderabad once used warehouse details instead of the primary registered address, which caused a mismatch during e-way bill generation. A simple review of the address fields could have resolved the issue immediately.

The Final Verdict

Across India, taxpayers frequently underestimate how severely small errors during GST online verification, such as a wrong digit, an outdated status, or a missed portal alert, can impact compliance. To prevent costly Input Tax Credit (ITC) mismatches and audit issues, maintain accurate records and build trust by always verifying every detail directly on the official GST portal, rather than making assumptions.

How to Check ITR Refund Status Online on the Portal

Fri, 28 Nov 2025 08:33:00 +0000

Each year, a taxpayer must file their income tax return for the relevant financial year by a prescribed deadline. If taxpayers have paid more tax than they actually owe, they are entitled to receive a refund from the Central Board of Direct Taxes (CBDT), known as an ITR refund.

Typically, the Income Tax Department issues these refunds before the end of the financial year. However, for the financial year 2024–25, there may be a delay in processing these refunds.

As per the latest information from the tax department, the refund process may be completed by the end of December. If the refund is delayed by the Income Tax Department, they are liable to pay interest on the amount owed to the taxpayer.

What Interest Will You Receive If Your Income Tax Refund Is Delayed?

As per Income Tax Section 244A, a taxpayer can claim up to 6% interest on the refund if there is a delay by the tax department.
As per Income Tax Section 437(1), an interest rate of 0.5% per month is mandatorily payable on the total refund amount.
However, certain conditions determine whether you are eligible to receive this interest. For example, interest is not payable if the ITR has been filed incorrectly or contains inaccurate information. Additionally, taxpayers who make errors in their ITR forms will not be eligible to receive interest.
If a refund is due, the interest payout is calculated from the relevant date as prescribed under the Income Tax Act.

Define an Income Tax Refund?

The Income Tax Department provides refunds to taxpayers who have paid more tax than they actually owe. These payments may be made under different categories, such as Tax Deducted at Source (TDS), Tax Collected at Source (TCS), Advance Tax, or Self-Assessment Tax.

When you file your income tax return, the department verifies all applicable deductions and exemptions to determine your tax liability. Any excess amount paid by the taxpayer before filing the return becomes eligible for a refund. There is a standard process for claiming a refund, which involves verifying your details online. Once all the information is correct and verified by the Central Board of Direct Taxes (CBDT), it usually takes about 4 to 5 weeks for the refund amount to be credited to your bank account.

Easy Steps to Check Your Tax Refund Status Online

Step 1: Visit the e-Filing portal.
Step 2: Enter your user ID and password provided by the department.
Please Note: After entering your details, a pop-up message may appear stating that your PAN is inactive if you are an individual user and your PAN is not linked to your Aadhaar.
Step 3: After logging in, navigate to the e-File tab, select "Income Tax Returns," and click on "View Filed Returns."
Step 4: You can now check the refund status for the selected Assessment Year (AY). Click on "View Details" to track your filed Income Tax Returns (ITR). Important statuses related to your ITR filing will be displayed:

Status 1: Refund has been issued

Status 2: Refund has been partially adjusted

Status 3: Refund has failed

Note: If your PAN is inactive or not linked to your Aadhaar, your refund may fail, and a warning message will be displayed.

A fair statement by the Chairman of the Central Board of Direct Taxes, Mr Ravi Agrawal, shared with PTI, stated that the Income Tax Department is currently reviewing certain cases where taxpayers may have incorrectly claimed deductions. This process is causing delays in issuing tax refunds. However, he also mentioned that taxpayers who are owed legitimate refunds can expect to receive them by the end of December.