Handling mismatch between salary income in return and Form 26AS (adjustments u/s 143(1)(a))

Published: May 7, 2018 at 8:09 pm

Last Updated on December 28, 2021 at 6:41 pm

Did you receive an email from the income tax department that there is a mismatch or inconsistency between salary income in return and Form 26AS?I did and this is how I responded. I am not a taxation expert, but I thought sharing this might help others and in any case myself. First of all, I think the IT department has goofed up in sending a similar notice en masse. Earlier, they used to consider the “Income chargeable under Salaries” mentioned in the TDS section and match it with the income mentioned in the salary section. Now they are comparing the gross income mentioned in form 26AS.

When they do this, naturally there will be a mismatch as form26AS shows the gross income before the deduction of tax-exempt allowances like HRA, transport etc. The “Income chargeable under Salaries”  shows the actual taxable income (before tax saving deductions). So naturally, there is a mismatch. As Muthu Krishnan pointed out, there is a way to enter the tax-exempt allowances in the ITR. However many of us do not do that.

We take the “Income chargeable under Salaries” shown in form 16 (but not in form 26AS) and enter it as gross income and do not report the tax-exempt allowances. The IT department did not mind this up to AY 2016-2017. This has now changed and hence this problem. So how to rectify this?

Rectifying mismatch between salary income in return and Form 26AS

First of all, I am only referring to the most common mismatch between salary income in return and Form 26AS: neglect of allowances in ITR. There could be many other reasons for such a notice and I cannot comment on those.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

Option 1: Safest option is to revise the ITR with correct allowances and ensure net income matches the “Income chargeable under Salaries” shown in form 16. I recommend this for most people unless you have proper guidance or if you are adventurous like me.

Under details of income from salary (schedule S in ITR2), enter total salary + professional tax in item 1 (red box). Enter professional tax in item 5. Now item 6 (blue box) – income under head salary should match the corresponding figure in form 16. Enter this in schedule TDS. Enter the allowances in item 7 (green box) and now the mismatch will not be there.

entering salary details in itr2

Option 2: 

1 log into the income tax e-filing portal

2 click on e-proceedings

3 Click on respond and you will see (a) agree with an option to file a revised return (b) partially agree with an option to file a revised return and (c) disagree (I clicked this)

4 When you click on disagree you will get a form like this

Rectifying mismatch between salary income in return and Form 26AS 

If you have income from other sources mention it in (1). Incorrect details quoted by the employer can be corrected but may require them to correct form 26as.

No 3, receipts not taxable is the main focus here. You can choose the appropriate allowance exempt under section 10 of the IT act and enter it there. I had to add transport allowance. You can add entries. No 4 is for NRIs.

In no 5, I added the tax on employer or professional tax. When I did this, the mismatch became zero as shown below.

adjustments u/s 143(1)(a) Rectifying mismatch between salary income in return and Form 26AS

Look at the blue box in the bottom right. I then submitted the form and got an email acknowledgement. Will keep you posted on the response from the IT dept.

What should you do?

I opted for “disagree” because of two reasons: (1) I have used the same approach for years without any problem. Why should they find fault with this now? (2) I am too lazy to revise ITR. Form 26AS should have the income under the head salaries clearly stated along with gross income. This is not the case now. Also, I am not too worried about their response. At worst they will ask me to revise ITR.

If you do not have experience in handling notifications from the IT office or if you are scared, seek help from a good CA. My cousin is a competent one living a few feet from me, but I did not consult him as I would like to DIY things and often face the music. Let us see how it goes.

A safe option would be to revise the ITR with the correct tax-exempt allowances and get net income to match income from head salaries in form 16. Then you can add all other tax saving deductions, capital gains etc. This should not take long if you have a copy of the old file. If the old file is missing, then you can download a copy of your return from the IT portal.

Did you get a similar notification? What are you going to do? Any comments on what I did? If you see anything wrong or would like to add, please do.

Credit Thanks to Antarpreet Singh for pointing a mistake.

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.
🔥Now Watch Let's Get Rich With Pattu தமிழில் (in Tamil)! 🔥
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter using the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl-version covers of "Chinchu Gets a superpower".
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)