Form 26AS is, in essence, an acknowledgement of sorts when it comes
to Tax Deducted at Source (TDS). Which is to say that Form 26AS shows the amount
of TDS, which has been deducted and is available as credit against our Income Taxliability, if any.

To understand this concept and in order to make it work in one’s
favour, one needs to understand the basics with respect to TDS and Form 26AS: 
1.  TDS or Tax Deducted at Source refers to the deduction
of Tax from the respective source of one’s income. Example: Let’s say that you
are a Salaried employee in an organization so, subject to the applicable basic
deduction/exemption limit, the
organization pays Salary to you after deducting TDS from the same. Thus, Salary
is your source of income and the deduction of Tax by the organization from
Salary (the source of income) before paying the same to you is referred to as
Tax Deducted at Source (TDS).
2.  Tax is Deductible from various sources of income
subject to applicable basic deduction/exemption limits. Example: Bank deducts
TDS from interest (the source of income) on Fixed deposits etc. 
3.  Now, TDS which has been deducted by the deductor (the
person responsible for making the payment, example: Bank which pays interest on
Fixed deposit so Bank will be referred to as a deductor), has to be deposited
in Government account on behalf of the deductee (deductee is the one who
receives the income, example: the receiver of interest on Fixed deposit from
4.  After depositing TDS in Government account, the
deductor, files a TDS return after the end of every quarter with National
Security Depositories Limited (NSDL). 
5.  The main purpose of filing TDS return is to inform the
Government as to what all payments have been made during the quarter, to whom
have the payments been made, what was the nature of payment like interest,
Salary etc., PAN no. of the person to whom the payments have been made, the
rate and amount of TDS deducted etc. 
6.  Thus, basis these returns, Government gives the credit
of TDS to the respective persons on behalf of whom TDS has been deducted by the

Form 26AS: 
1.  Government gives the credit of TDS on the basis of TDS
return and this credit gets reflected in Form 26AS. Example: Let’s
say that you have a Fixed deposit of Rs.10,00,000/- @8% with ICICI bank and the
Bank paid the interest of Rs.18,000/- (20,000-2,000 (TDS)) for the period April
to June and then in July filed the TDS return for the period April to June.
Thus, after filing of TDS return by ICICI bank, a credit of Rs.2,000/- will get
reflected in your respective Form 26AS because in the TDS return filed by Bank,
Bank had given the details of interest payable to you i.e. Rs.20,000/-,
the amount of TDS deducted from the same i.e. Rs.2,000/- , your PAN number, Name etc. Hence, on the basis of
your PAN number, the Government gives the credit of Tax deducted from your
income which gets reflected in Form 26AS.
2.  The organization deducting TDS from your income, like
ICICI bank in the aforementioned example, will issue a TDScertificate to you after filing TDS return. 
3.  You can compare Form 26AS with TDS certificates issued
to you and if the amount of TDS deducted as per Form 26AS and as per TDS
certificates is the same then it means that the Tax credit reflecting under your
PAN in Form 26AS is correct. However, in case if TDS in certificates and Form
26AS does not match then you need to inform the deductor i.e. ICICI bank in the
aforementioned example. The deductor will then revise the TDS return filed
because such an issue of TDS credit not getting reflecting in Form 26AS occurs
only when there is some error in TDS reurn filed by the deductor. 
4.  Most common reason due to which proper credit does not
get reflected in Form 26AS is that the deductor has not quoted or has quoted
incorrect PAN number (your PAN number) in TDS return. 
5.  Once the revised TDS return is filed by the deductor
after making necessary corrections then the credit will get reflected in one’s
Form 26AS after sometime. 
Thus, before filing the return of income one must check Form
26AS to make sure that proper TDS credit is appearing in Government records. 
Please remember that irrespective of TDS certificates you have,
credit of Tax shall be given on the basis of Form 26AS only. However, these
days TDS certificates are being downloaded from TRACES portal, thus, chances of
mismatch between TDS certfificates and Form 26AS are minimal. 
Please take care that you claim TDS credit in your Income Tax
Return after tallying TDS certificates received by you with Form 26AS so that
you get 100% benefit of TDS deducted from your income. As, at times, it so
happens that the amount of TDS credit appearing in Form 26AS is more than the
amount in TDS certificates and this happens because one or some of the
deductors who have deducted TDS on your behalf have not issued TDS
certificate(s), for the same, to you.

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