26AS Reconciliation: A Step-by-Step Process to Match Form 26AS with Your Books

For a company that receives TDS from many customers (IT services, contractors, NBFCs, lessors, logistics firms), TDS receivable is often one of the larger balances on the balance sheet. Every rupee that doesn't appear in Form 26AS is a rupee the Centralized Processing Centre (CPC) will not allow when it processes your return. This guide sets out a repeatable process that finance and tax teams can run every quarter, not just at year-end.

Why 26AS reconciliation matters

• Credit is allowed based on 26AS, not your ledger. Under the Income-tax Act, 2025, credit for TDS is governed by Section 390, read with Rule 203 of the Income-tax Rules, 2026. Credit is generally granted to the deductee based on the deductor’s reported information, for the tax year in which the corresponding income is assessable. Where the income is assessable in another person’s hands, credit may be granted to that person subject to the prescribed conditions. The credit is processed based on the reported TDS information and the claim made in the income-tax return, subject to verification.
• Shortfalls become demands. If you claim more TDS than 26AS shows, the return is processed with the lower figure and you receive an intimation under section 143(1) with a demand or a reduced refund.
• Auditors look at it. The tax audit report and statutory audit both rely on a clean TDS receivable balance; unexplained differences tend to become write-offs.
• Time limits are real. Deductors can correct their statements, but chasing a customer for a correction two years later rarely works. Quarterly reconciliation keeps the follow-up window short.

What you are reconciling: 26AS, AIS and the books

From 1 April 2026, tax reporting for Tax Year 2026–27 onwards is governed by the Income-tax Act, 2025, and the Income-tax Rules, 2026. Form 26AS is replaced by Form No. 168, the evolved Annual Information Statement (AIS), for Tax Year 2026–27 onwards. AIS for Assessment Year 2026–27 will continue to cover FY 2025–26 under the Income-tax Act, 1961, while Form No. 168 will report information for Tax Year 2026–27 under the new Act. Both statements will be accessible through the income-tax e-filing portal. TDS credits for the transition period will be reported under the applicable old or new provisions, and corrections for earlier years must follow the procedures applicable to those periods.

Step-by-step 26AS reconciliation process

Step 1: Fix the scope

Decide the PANs, the financial year (or tax year) and the quarters. Groups with several entities should run each PAN separately, because credit is PAN-specific. Freeze a cut-off date for the books so the comparison isn't a moving target.

Step 2: Download the data

• Log in to the Income-tax e-Filing portal and navigate to e-File → Income Tax Returns → View Form 26AS. You will be redirected to the TDS-CPC (TRACES) portal. Accept the terms of use, select View Tax Credit (Form 26AS/Annual Tax Statement), choose the relevant Assessment Year and available format, and click View/Download to access the statement in HTML or download it in PDF, text or Excel format.
• Download AIS and TIS from the e-filing portal (AIS menu).
• Export the TDS receivable ledger and the receipts/sales register from your ERP with: customer code, customer name, customer TAN (if captured), invoice/receipt date, gross amount, TDS amount and section.

Step 3: Normalise both sides

Most mismatches in a manual reconciliation are formatting problems, not tax problems. Before matching:

• Build a customer master with TAN. Map each customer code to the deductor TAN(s) that appear in 26AS. Large customers often deduct under several TANs (one per branch or unit).
• Standardise dates to the quarter of credit, because deductors report by the date of payment or credit, whichever is earlier, not your invoice date.
• Split ledger entries by section (for example, professional fees vs contract payments vs rent), since 26AS reports section-wise.
• Remove reversals and credit notes that net to zero, but keep a list of them.

Step 4: Match in passes

Run matching from strictest to loosest, and lock each match before moving to the next pass:

• 1. Exact match: TAN + section + TDS amount + quarter.
• 2. Amount match within TAN: same TAN and TDS amount, different quarter (timing difference).
• 3. Aggregated match: several invoices in books against one 26AS line (customers often deduct on a monthly total).
• 4. Tolerance match: small rounding differences (for example, up to ₹10 per line) treated as matched and recorded.
• 5. Name-based match: where TAN is not in your customer master, match on deductor name and amount, then add the TAN to the master.

Step 5: Classify every difference

Check the booking status against the current Form 26AS legend. Treat entries that are provisional, unmatched or overbooked as open items requiring verification and follow-up with the deductor.

Step 6: Follow up, record and re-run

• Send each customer one consolidated list: their TAN, your PAN, the invoices, TDS amounts and quarters missing.
• Track replies and correction filing dates. Corrections typically show in 26AS a few days after TRACES processes them.
• Re-run the reconciliation before filing the return and again before the tax audit.
• Write off or provide for credits that will not be recovered, with approval, and keep the working in the audit file.

Year-end 26AS reconciliation checklist

• 26AS, AIS and TIS downloaded for every PAN in the group
• Customer master updated with all deductor TANs
• Books cut-off frozen and ledger exported section-wise
• Exact, timing, aggregated and tolerance matches completed
• Every unmatched line classified by cause
• Missing-TDS statements sent to customers, with follow-up dates
• Non-final booking status entries listed and followed up
• AIS checked for income reported by others but not in books
• TDS claimed in the return equals 26AS-supported credit (plus any documented claim)
• Unrecoverable credits approved for write-off; working filed for audit

Common mistakes

• Matching on customer name only. Names in 26AS come from the deductor's TAN registration and rarely match your ERP name.
• Ignoring multiple TANs per customer. One customer, five branches, five TANs: credits appear "missing" when they're under another TAN.
• Reconciling once a year. By the time the return is due, Q1 and Q2 corrections are hard to get.
• Claiming the books figure in the return. This invites a 143(1) adjustment; claim what 26AS supports and pursue the rest.
• For Tax Year 2026–27, verify TDS section codes against the Income-tax Act, 2025 and update ERP mappings; historical transactions remain governed by the Income-tax Act, 1961.

How Figment's 26ASCPC handles this

26ASCPC is Figment's Form 26AS and AIS reconciliation software. It reconciles 26AS and AIS with your books automatically, including for multiple PANs, and handles the steps above as follows:

• PAN-TAN validation of both sides before matching.
• Fuzzy matching across 100+ parameters, so credits are matched on TAN, PAN, section, amount and date even where names, dates or amounts don't line up exactly.
• Mismatch reports for TDS receivable, listing missing and mismatched credits by customer, which can be used as the follow-up list.

On the deductor side of the same problem, TaxCPC runs bulk PAN verification and live validation with TRACES before TDS returns are filed, which reduces wrong-PAN and unmatched-challan cases at source. If a 143(1) intimation arrives because credit was short-allowed, NoticeCPC tracks it alongside your other income tax and GST notices.

Key takeaways

• TDS credit follows 26AS, so reconcile 26AS with your books every quarter, not only at year-end.
• Build a customer-to-TAN master first; it removes most false mismatches.
• Match in passes (exact, timing, aggregated, tolerance) and classify every difference by cause.
• Send customers one consolidated missing-TDS list and re-run before filing.
• For tax year 2026-27, plan for new section codes and a possible new form number for the statement.