Critical Compliance Alert for TDS / TCS Deductors & Collectors

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TDS/TCS Correction Statements: Final Compliance Window Before Time-Bar Under the New Income-tax Law

The transition from the Income-tax Act, 1961 to the new Income-tax Act, 2025 marks a significant shift in India’s direct tax compliance framework. One of the most critical — and time-sensitive — consequences of this transition relates to the filing of TDS/TCS correction statements.

Many deductors and collectors remain unaware that correction filings for past periods will soon become permanently time-barred, with no scope for rectification thereafter.

This article explains the legal position, applicable deadlines, and the immediate actions required.

1. What Has Changed?

With the repeal of the Income-tax Act, 1961, legacy compliance provisions governing TDS/TCS statements will cease to apply after the transition period.

Correction statements for FY 2018–19 (Q4) to FY 2023–24 (Q3) will be accepted only up to 31 March 2026.
From 01 April 2026, such correction filings will become time-barred.

This is a hard statutory cut-off, not an administrative relaxation.

2. Legal Basis Under the Income-tax Act, 2025

Section 397(3) of the Income-tax Act, 2025 introduces a clear limitation period:

Correction statements can be filed within two years from the end of the tax year in which the statement was required to be filed.

This provision effectively closes the door on indefinite correction filings that were earlier possible under the 1961 Act framework.

3. Periods Impacted by the Time-Bar

The following periods are directly affected:

  • FY 2018–19 (Q4)

  • FY 2019–20 (All quarters)

  • FY 2020–21 (All quarters)

  • FY 2021–22 (All quarters)

  • FY 2022–23 (All quarters)

  • FY 2023–24 (Q1 to Q3)

Any errors, omissions, or mismatches relating to these periods must be corrected on or before 31.03.2026.

4. Why This Is a Serious Compliance Risk

Failure to file correction statements within the permitted timeframe may result in:

  • Permanent loss of the right to correct errors

  • Unresolved TDS/TCS mismatches

  • Demands for tax, interest, and penalties

  • Prolonged litigation with no rectification remedy

Once the limitation period expires, even genuine errors cannot be rectified.

5. What Deductors and Collectors Should Do Now

To mitigate future exposure, deductors and collectors should:

  1. Conduct a comprehensive review of all past TDS/TCS filings

  2. Identify discrepancies in PAN details, challans, deductee data, or amounts

  3. File all pending correction statements well in advance of 31 March 2026

  4. Maintain documentary evidence of all corrections filed

Proactive compliance today will prevent irreversible consequences tomorrow.

6. Key Takeaway

The shift to the Income-tax Act, 2025 is not merely procedural — it introduces strict statutory timelines.
The window to correct historical TDS/TCS statements is finite and non-extendable.

Once time-barred, correction rights are lost forever.

Deductors and collectors should treat this as a final compliance opportunity.

Issued in public interest to promote tax compliance awareness.

ClickNexi

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