TDS Correction Time Limit 2025 has now become a major compliance shift under the Income Tax Act 2025. Earlier deductors had 6 full years to correct errors in filed TDS/TCS statements. But now this time limit has been reduced to only 2 years from the end of the financial year, effective 1st April 2026. This is a huge change for all businesses, companies, HR payroll teams, consultants and accountants who handle TDS compliances. This new provision will completely transform how corrections, reconciliation, challan matching and PAN validation will be handled going forward.
Earlier, tax deductors had up to six years to revise or correct their TDS/TCS statements. That window is now reduced drastically. This move is expected to push faster accuracy, reduce pending mismatch issues and ensure quicker credit reflection to taxpayers.
TDS Correction Time Limit 2025 – What Changed Under Income Tax Act 2025
As per Section 397(3)(f) of the Income Tax Act 2025, the TDS Correction Time Limit 2025 rule mandates that correction statements must be delivered within 2 years from the end of the tax year. Importantly, Income Tax Act 1961 will be repealed from 01 April 2026, and therefore all future compliances will work under the new Income Tax Act 2025 framework. This is a major structural and compliance tightening for India’s tax compliance ecosystem. Instead of waiting years to identify & rectify errors, deductors now need proactive validation and systematic periodic corrections.
Impact of TDS Correction Time Limit 2025 on Deductors & Taxpayers
The TDS Correction Time Limit 2025 will drastically improve credit flow to taxpayers. Before this change, most deductors took several years to file corrections, which resulted in delayed refunds, mismatch in Form 26AS/AIS, wrong PAN entries, and thousands of scrutiny notices. Under the new 2-year limit, deductors must finish corrections much earlier. They no longer have the luxury to wait for litigation or disputes to end before correcting TDS data. They must maintain tighter control and reconciliation checks throughout the year instead of doing bulk corrections at the end. Taxpayers will benefit significantly because tax credits will reflect faster, refunds will release quicker, error ratio will reduce, and dependency on employer/vendor correction delays will also reduce.
CBDT has already advised starting the review NOW because from FY 2025-26 Q4, the volume of correction filings will be extremely high pan India. Those who wait until last moment may face system slowdowns and risk missing the deadline.
Important Deadline for Old Years Under TDS Correction Time Limit 2025
As confirmed by CBDT, TDS correction statements for the following years can be filed only up to 31 March 2026:
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FY 2018-19 Q4
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FY 2019-20 to FY 2022-23 (all quarters)
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FY 2023-24 Q1 to Q3
From 01 April 2026, these will become time-barred permanently. The TDS Correction Time Limit 2025 will apply going forward for future years.
This means every deductor must now systematically initiate internal TDS checking, challan validation, vendor PAN correction, and mismatch traceback before this cut-off. Delay beyond March 2026 will result in loss of credit eligibility for deductees and penalty exposure for deductors.
The TDS Correction Time Limit 2025 is a critical turning point in India’s TDS compliance system. The earlier 6-year window promoted delay, backlog and dispute-based correction cycles. The new 2-year limit forces accountability, real-time checking and data accuracy. Deductors must urgently audit old statements now and not wait for FY 2026. Correcting pending years before 31 March 2026 must be top priority. This new provision will improve refund speed, reduce mismatch litigation and protect taxpayers from avoidable notices and credit delays.
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