TDS challan mistake? Taxpayers need old TRACES portal to fix FY26 error
New Delhi, Jun 22, 2026
Wrong financial year in TDS challan can block tax credit. Here's how taxpayers can correct the error using old TRACES portal during transition
Taxpayers who have accidentally deposited tax deducted at source (TDS) challans under the wrong financial year during transition to the new Income-tax Act, 2025 will have to rely on the old TRACES portal to correct the mistake.
The new TRACES platform currently does not support this correction facility.
The error can create problems later because the TDS credit may not reflect correctly against the taxpayer’s records for tax year 2026-27.
This could increase the tax payable at the time of filing the income tax return (ITR) and may also trigger mismatches between TDS statements and tax records.
The Income Tax department has been rolling out changes linked to the implementation of the new Income-tax Act, 2025. During this transition, taxpayers and deductors need to be careful while selecting the relevant financial year and tax details while making TDS payments.
Why the TDS challan correction matters
TDS deducted by an employer, bank, company or any other deductor is linked to challan details submitted to the Income Tax department. If the financial year mentioned in the challan is incorrect, the tax payment may not get mapped properly.
For example, if a TDS challan that should have been filed for FY27 is mistakenly deposited under FY26, the system may not recognise it for the correct tax year. This can affect the availability of tax credit while filing returns.
According to guidance available on the Income Tax department and TRACES platforms, corrections for eligible challan details can be made through the OLTAS Challan Correction facility.
New TRACES portal does not support this correction yet
During the transition from the Income-tax Act, 1961 to the Income-tax Act, 2025, certain legacy correction facilities continue to remain available only on the older TRACES portal.
Taxpayers and deductors who need to change the financial year of a TDS challan must currently use the old TRACES platform instead of the new portal.
The correction facility is mainly relevant for deductors managing TDS payments through TAN-based compliance.
How to correct wrong financial year in TDS challan
The correction process needs to be completed through the old TRACES portal:
1. Visit the TRACES website and log in using TAN credentials.
2. Go to the section for challan correction or OLTAS challan correction.
3. Select the relevant statement/payment details and raise a correction request.
4. Choose the correction category and submit the request.
5. Once the request becomes available, update the incorrect details, such as the financial year, wherever permitted.
6. Submit the corrected request and track the status.
After processing, deductors should verify whether the updated challan details are correctly reflected in the tax records.
What happens if the mistake is not corrected?
A wrong financial year entry can lead to several compliance issues. The taxpayer may not receive the expected TDS credit, which can increase the tax demand during ITR processing.
It may also result in:
• mismatch between TDS returns and challan details;
• incorrect reflection of tax payments;
• possible tax department communication;
• delays in resolving refund or credit-related issues.
Tax experts advise deductors to check challan details carefully, especially during the shift to the new tax law framework.
Taxpayers should verify before filing returns
With changes being introduced under the Income-tax Act, 2025, taxpayers should ensure that payments, TDS statements and tax credits are aligned with the correct tax year.
The Income Tax department has advised taxpayers to use official portals for compliance-related actions and check the latest instructions as digital systems continue to be updated.
For now, those facing a wrong-year TDS challan entry for FY26 and tax year 2026-27 need to complete the correction through the legacy TRACES portal to avoid future tax credit issues.
[The Business Standard]
