Form 24Q and Form 26AS are vital in the Indian income tax system, though they serve very different purposes under the Tax Deducted at Source (TDS) system. Although both are associated with the compliance of TDS, they are utilized by different stakeholders and they have different purposes. These two types are usually mixed up by many taxpayers who believe that they are interchangeable.
This blog describes the distinction between Form 24Q and Form 26AS, their objective, applicability and practical significance in the compliance with income tax.
Introduction
TDS is a necessary provision in the Income Tax Act, 1961 and is designed to collect tax when the income is generated. In order to make it transparent and to get credit for taxes, the Income Tax Department has come up with many forms and statements.
Form 24Q and Form 26AS happen to be the most popular among them as concerned with salary and TDS. Nevertheless, they have a fundamental difference in their nature. This is because knowing the difference between the two forms assists the employer and the employee in making mistakes when filling out the returns or in checking the tax credits.
What is Form 24Q?
An employer is required to file a Form 24Q, which is a quarterly TDS return. It includes information on money presented as tax deducted at source on the salary payments to employees within a given quarter.
The details in this form are employee PAN, salary paid, tax deductible, exemptions and details of the challan on which the tax was deposited with the government. Given the fact that salary income is taxed under a given head, Form 24Q is meant to be used specifically to report on salaries TDS.
Form 24Q is submitted four times per year and serves as the foundation for changing the records of the tax credits of employees.
What is Form 26AS?
Form 26AS is a tax credit statement of the taxpayer, which is filed on an annual basis. It is a mirror image of all the taxes that are deducted or collected on a PAN in a financial year.
This statement covers TDS paid by the employers, banks, clients and other deductors, advance tax paid, self-assessment tax and refunds. Form 26AS is not filed by the taxpayer as opposed to Form 24Q. The Income Tax Department generates it automatically in accordance with the information received from deductors.
Form 26AS helps the taxpayers to determine whether the taxes charged on their income have been deposited and reported properly.
Purpose of Form 24Q and Form 26AS
Form 24Q is mainly intended to be a reporting form. It helps the Income Tax Department to monitor the payments of salary and the TDS deducted by employers.
Form 26AS, on the other hand, is a validation and reference document by the taxpayer. It enables them to match up tax credits prior to making their income tax returns.
Therefore, one of them is a compliance obligation, and the other one is a consolidated tax statement.
Who Do We Put in Charge of Form 24Q and Form 26AS?
Form 24Q is the requirement of employer or deductor. It should be ready, approved and submitted within the given due dates.
The Income Tax Department maintains Form 26AS and makes it available to taxpayers via the income tax portal. It cannot be changed by employees or other taxpayers.
1. Frequency and Timing
- Form 24Q is submitted after every three months and a separate one is filed per quarter of the financial year. The error or postponement in filling has a direct impact on the correctness of Form 26AS.
- Form 26AS is also updated periodically during the year as and when TDS returns are received and tax payments are credited.
2. Practical Distinctions of Usage
- Form 24Q is filled by employers who would like to report the salary information and adhere to the laws concerning the TDS. Form 26AS, on the other hand, is used by employees to establish whether the employer has deducted and deposited TDS correctly.
- In case Form 24Q is not filled correctly or on time, then the required entries will not reflect effectively in Form 26AS, and as a result, there will be a mismatch in filing income tax returns.
3. Correlation of Form 24Q and Form 26AS
- Form 24Q is a source document and Form 26AS is the resultant tax credit statement. This information submitted in Form 24Q is later processed by the tax department and passed to Form 26AS.
- The accuracy of Form 24Q is highly important in this relationship.
Key Differences at a Glance
- Form 24Q is a quarterly TDS statement on which employers pay salaries, and Form 26AS is a tax credit statement, which can be availed in a year by the taxpayers.
- Form 24Q is mandatory compliance for deductors, whereas Form 26AS is a reference to taxpayers.
- Form 24Q indicates TDS information, and Form 26AS indicates tax that has been credited.
Significance of the Difference Understanding
The two types of confusion are likely to cause wrong assumptions when filing taxes. Employees can criticise employers where credits are missed without ensuring that they check the filing timelines, and employers may not notice the errors based on the assumption that Form 26AS is going to automatically fix itself.
It is better to understand clearly to facilitate compliance and complete filing of income tax returns.
Conclusion
Form 24Q and Form 26AS are two forms which are interrelated but are used in absolutely different purposes. Form 24Q is a statutory form submitted by employers to declare the salary TDS, whereas Form 26AS is a consolidated tax credit form that is used by taxpayers to confirm their payment of taxes. Their differences and roles require respective employers, employees, and tax professionals to be aware of them in order to achieve full tax compliance with no errors.
