The Indian tax system is undergoing a historic transformation. With the introduction of the Income Tax Act, 2025, the long-standing Income Tax Act, 1961 will stand repealed with effect from 1st April 2026. One of the key transitional provisions relates to the filing of TCS/TDS correction statements.
Many deductors and collectors may still have pending corrections in old TDS/TCS statements. It is crucial to note that these corrections will not be possible indefinitely. The law has specifically provided a time-limit for filing correction statements, after which no further revisions will be accepted.
- Section 536 of the Income Tax Act, 2025 repeals the Income Tax Act, 1961 w.e.f. 01.04.2026.
- Section 397(3)(f) of the Income Tax Act, 2025 allows a deductor/collector to file a correction statement within two years from the end of the tax year in which the statement was originally required to be furnished.
🔗Visit our Income Tax 2025 Section
This effectively means that correction statements relating to older financial years will be subject to limitation.
Last Date to File TCS / TDS Correction Statements
As per the above provisions, the following timelines apply:
- FY 2018-19 (Quarter 4)
- FY 2019-20 (Q1 to Q4)
- FY 2020-21 (Q1 to Q4)
- FY 2021-22 (Q1 to Q4)
- FY 2022-23 (Q1 to Q4)
- FY 2023-24 (Q1 to Q3)
Correction statements for the above periods shall be accepted only till 31st March 2026.
From 1st April 2026 onwards, filing of correction statements for these years will be time-barred, and the TRACES system will no longer allow such submissions.
Why Does This Matter?
- Permanent Closure of Past Corrections – Once the deadline lapses, no further rectification of errors (PAN errors, challan mismatches, deduction details, etc.) will be possible.
- Impact on Deductees – Employees, vendors, and other deductees may face issues in claiming tax credits if corrections are not filed in time.
- Compliance Risk – Non-correction may lead to penalties, interest, or disputes with the Income Tax Department.
- Transition to New Law – Since the 1961 Act will be repealed, the system is designed to ensure that all old compliance is settled before moving fully into the new regime.
The Overlooked Issue: TDS Demands on TRACES Portal
A large number of deductors fail to regularly check the TRACES Portal (TDS Reconciliation Analysis and Correction Enabling System) for pending TDS demands. These demands often arise due to:
- Short deduction of TDS
- Late payment of challans
- PAN mismatches in filed statements
- Incorrect challan details in returns
Many of these demands can actually be resolved only by filing a correction statement. However, since deductors overlook them, demands remain unresolved for years, resulting in:
- Accumulation of interest and penalties
- Demand adjustments against future refunds
- Mismatches in Form 26AS/AIS for deductees
With the cut-off date of 31st March 2026, deductors must act urgently. If these corrections are not carried out before the deadline, the demands will remain permanently outstanding, with no legal avenue to correct them later.
What Deductors and Collectors Should Do Now?
- Log in to TRACES Portal and check the “Defaults” or “Demand” tab for any pending issues.
- Download Justification Reports to identify the exact reason for each demand.
- File Correction Statements immediately to fix errors like challan mismatches or PAN errors.
- Settle Demands by paying any remaining tax, interest, or fees before the deadline.
- Maintain Proper Documentation for future departmental queries.
Frequently Asked Questions (FAQs)
Key Takeaway
The window for filing correction statements for FY 2018-19 to FY 2023-24 is closing on 31st March 2026. From 1st April 2026, no further corrections will be possible as the Income Tax Act, 1961 will be repealed and replaced by the Income Tax Act, 2025.
Deductors, collectors, and other stakeholders must review TDS demands on TRACES, download justification reports, and file all pending correction statements before the cut-off date.
Failure to do so will result in permanent unresolved demands, penalties, and compliance hurdles.
