Form 26AS / Form 168 Reconciliation for Auto-Component Suppliers: OEM TDS Mismatch Resolution

A finance controller at a ₹500 crore Tier-1 auto-component supplier in Chennai opens the consolidated Form 168 download for May 2026 — the first full month under the new Income Tax Act 2025 framework. ₹3.42 lakh of fresh deductions appear from four OEM TANs — Tata Motors (Chennai TAN), Hyundai Motor India (Sriperumbudur TAN), Royal Enfield (Oragadam TAN), and Daimler India Commercial Vehicles (Oragadam TAN). Each line carries the new payment code: 1002 for contractor TDS on tooling and conversion charges under Section 393(1)(a), and 1012 for purchase TDS on net component supplies above ₹50 lakh per OEM per FY under Section 393(1)(k). Two of the eleven Tata Motors deductions carry the wrong PAN (a historical sister-concern PAN from a 2023 restructuring that should have been deactivated). One Hyundai deduction is under code 1002 when the underlying contract is purchase (code 1012). And — separately — the legacy Form 26AS for FY 2025-26 still carries one open ₹4.2 lakh dispute against a Tata Motors February 2026 deduction under Section 194Q, sitting at the deductor’s end pending a correction statement on TRACES.

This is the Form 26AS reconciliation auto component supplier India routine — multi-OEM TAN, multi-code, cross-era. A Tier-1 of this size cannot run it in Excel and stay even on first-pass match rates. This guide walks the monthly Form 168 download routine, the five recurring mismatch causes, the cross-era handling between legacy 194x codes (Form 26AS) and new 1001-1092 codes (Form 168), the foreign-currency commission TDS overlay under Section 413 code 1062, and a worked example on a ₹35 lakh annual TDS receivable with 4 OEM TANs.

Quick reference

What does Form 168 contain, and how does it differ from legacy Form 26AS?

Form 26AS ran from FY 2010-11 through FY 2025-26 as the consolidated annual tax statement under Rule 31AB of the Income Tax Rules. Part A consolidated TDS, Part A1 TDS on Section 195 payments, Part B TCS, Part C advance tax / self-assessment tax, Part D refund details, Part E AIR information, Part F TDS on property under Section 194-IA, Part G TDS defaults, Part H Specified Financial Transactions (SFT).

Form 168, operative under the Income Tax Act 2025 framework from FY 2026-27 onwards, restates the same consolidated tax-credit infrastructure with three substantive operational changes:

1. New payment code taxonomy in the 1001-1092 range replaces the legacy 194x / 195 / 206C codes. Code 1002 for contractor (Section 393(1)(a)), 1012 for purchase (Section 393(1)(k)), 1062 for foreign commission (Section 413), 1071 for scrap TCS (Section 394). See TDS payment codes 1001-1092 India for the full map.
2. TRACES download structure adjusts — deductor-side challan lineage in the new payload uses code-1071-style references. The XML and JSON downloads carry both legacy and new code paths during the cross-era window.
3. Form 168 generation is continuous and live, updated as deductors file their quarterly returns. The legacy Form 26AS update lagged deductor filings by 2 to 6 weeks; Form 168 shortens this materially.

The substantive content of an auto-component supplier’s Form 168 mirrors Form 26AS — deductor TAN, deductor name, transaction date, amount paid or credited, TDS deducted, payment code, status (matched / mismatched / not yet matched). The reconciliation discipline is the same; only the code taxonomy is new.

Why do auto-component supplier TDS mismatches happen?

Five recurring mismatch causes show up at every auto-component Tier-1 month after month:

Cause 1: Wrong PAN at deductor end

The OEM’s vendor master holds a historical PAN from a prior sister-concern, merger, or restructuring. The deduction lands in Form 168 against the wrong PAN — sometimes a parent company, sometimes a now-defunct sister concern. The supplier never sees the credit in its own Form 168 because the credit is sitting against the wrong PAN.

Resolution: identify via the deductor’s TDS certificate (Form 16A for inbound deductions), escalate to OEM finance for a TRACES correction statement, follow up until the corrected entry reflects in the supplier’s Form 168.

Cause 2: Late deductor filing

The OEM has not filed its quarterly TDS return for Q1 FY 2026-27 by the 31 July deadline. Any deductions made during April-June 2026 do not appear in the supplier’s Form 168 until the deductor files. Some OEM legal entities are systematically slow — typically filing 2 to 4 weeks past the statutory deadline.

Resolution: track deductor filing-status through the supplier’s own Form 26Q reciprocal view, escalate at day 35 past quarter-end, expect appearance by day 60.

Cause 3: Code mismatch

The OEM has deducted at the wrong payment code. A purchase transaction (correctly under code 1012, 0.1% above ₹50 lakh threshold) appears under code 1002 (contractor, 1% / 2%). The supplier’s books carry the deduction at the contracted code; Form 168 shows it under a different code. The total amount may or may not match depending on which contract terms were applied.

Resolution: deductor-side correction statement on TRACES under the correct code. The supplier must hold the Form 168 entry in dispute until corrected.

Cause 4: Value mismatch

The OEM has deducted on a value that includes GST when contracts specify TDS on pre-GST taxable value. A ₹100 lakh inclusive invoice carrying ₹15.25 lakh GST at 18% should have TDS of ₹84,745 at 1% on the pre-GST ₹84.75 lakh (code 1002, company). Some OEM TDS systems apply 1% on ₹100 lakh inclusive = ₹1,00,000. The over-deduction lands in Form 168 at ₹1,00,000; the supplier’s expected credit is ₹84,745.

Resolution: rate-conformance escalation. The supplier accepts the higher credit but documents the contractual position for audit defence.

Cause 5: Missing deduction

The OEM has not deducted at all on a contractually-deductible transaction. Most common with tooling-recovery invoices and small first-time supplies that the OEM’s TDS engine misclassifies. The supplier sees the gross billing in receipts but no TDS credit in Form 168.

Resolution: deductor-side ledger reconciliation, request the deductor to file the missed deduction on a current-quarter Form 26Q with payment of the under-deducted amount plus interest under Section 466.

What is the recommended monthly Form 168 download and reconciliation routine?

A five-stage monthly routine — designed for a Tier-1 with 4 to 8 OEM TANs and ₹25 to ₹50 lakh annual TDS receivable.

Stage 1 — Download. Log into TRACES on the 15th of every month. Download Form 168 for the current FY (cumulative through the latest deductor filing). For any FY 2025-26 lineage still in correction, download Form 26AS in parallel.

Stage 2 — Segregate by OEM TAN. Filter downloaded entries by deductor TAN. A Tier-1 with 4 OEMs typically has 6 to 8 TANs because each OEM uses different TANs by plant location (Maruti has TANs for Manesar, Gurgaon, Bengaluru, Sonipat; Tata Motors has TANs for Pune, Jamshedpur, Pantnagar, Sanand).

Stage 3 — Match against books. For each TAN, run a three-key match: original invoice number reference (if carried by the deductor in the narration), gross value, and TDS deduction percentage. The supplier’s invoice ledger must hold the same three keys.

Stage 4 — Route mismatches. Unmatched entries go to a Form 168 dispute register with the cause flagged (wrong-PAN / wrong-TAN / wrong-code / wrong-value / missing-deduction / late-filing). Each dispute has a deductor-action-required tag and an internal escalation owner.

Stage 5 — Quarterly controller-level summary. At quarter-end the controller reviews a Form 168 vs books variance summary showing total billing, expected TDS, actual TDS in Form 168, unmatched, in-dispute, closed-this-quarter.

The Tier-2 conversion-charge TDS layer

The auto-component finance team’s TDS surface is two-sided. On the inbound side (OEM-to-Tier-1) the deductions appear in Form 168 as discussed above. On the outbound side (Tier-1-to-Tier-2) the Tier-1 itself is the deductor — deducting 1% / 2% under Section 393(1)(a) code 1002 on Tier-2 job-work conversion-charge invoices (heat treatment, plating, machining), and 0.1% under Section 393(1)(k) code 1012 on Tier-2 raw-material purchases above ₹50 lakh aggregate per supplier per FY.

These outbound deductions appear in the Tier-1’s own Form 26Q quarterly return and feed into each Tier-2’s Form 168. They do not appear in the Tier-1’s Form 168 — Form 168 captures inbound deductions only. But the Tier-1’s reconciliation engine must hold both sides because the Section 466 interest exposure on late deposit of outbound TDS is material at scale. See Section 393 TDS new Income Tax Act reconciliation for the outbound-side mechanics.

Foreign-currency commission TDS under Section 413 code 1062

An auto-component Tier-1 with overseas export sales typically pays commission to international sales agents at 2% to 5% of FOB invoice value. The commission attracts TDS under Section 413 of the Income Tax Act 2025 with payment code 1062, at the DTAA rate applicable to the agent’s country of residence — typically 10% to 15% for jurisdictions like Singapore, UAE, UK, Germany, USA.

The TDS is deducted at the time of credit or remittance, whichever is earlier. The deduction flows through the Tier-1’s outbound TDS register (Form 26Q for resident agents, Form 27Q for non-resident agents), is deposited monthly, reported in the quarterly return, and finally lands in the agent’s Form 168 (or equivalent for non-residents). It does not appear in the auto-component Tier-1’s own Form 168.

Two operational items must align. First, the DTAA rate determination requires the agent’s Tax Residency Certificate (TRC), Form 10F, and Permanent Establishment declaration. Second, the foreign-currency conversion at TDS deduction must use the SBI TT buying rate per Rule 26 (legacy) or the equivalent rule under the new framework.

Worked example — Tier-1 with ₹35 lakh annual TDS receivable, 4 OEM TANs

A Tier-1 brake-system supplier in Pune billing ₹240 crore annually across four OEMs with the following FY 2026-27 TDS profile:

Monthly Form 168 download yields 38 to 52 line entries per month across 6 OEM TANs (Maruti Manesar + Maruti Gurgaon; Tata Pune + Tata Pantnagar; Mahindra Chakan; Hyundai Sriperumbudur). At a typical first-pass mismatch rate of 14% to 22%, that is 6 to 11 mismatches per month requiring resolution.

A controller running Excel sees these mismatches at quarter-end when the consolidated Form 168 variance summary is prepared. By then deductor-side correction windows are tight, and 30% to 40% of mismatches end up unresolved at year-end — leaking ₹2 lakh to ₹4 lakh of TDS credit annually that the supplier had to fund from cash. A Tier-1 of this size cannot absorb that leakage and stay competitive.

Auto component reconciliation software India treats Form 168 reconciliation as a structured variance stream in the same engine that handles OEM settlement, Tier-2 outbound TDS under code 1002, and Section 394 scrap-sale TCS under code 1071. TransactIG’s auto-component preset surfaces mismatches at first-pass match rates moving from 51% to 88%, deployed on AWS Mumbai under ISO 27001:2022, with a 2 to 4 week build window. The deductor-correction action queue closes mismatches at month-2 of discovery instead of month-12.

Cross-era handling — legacy Form 26AS and new Form 168 in parallel

Through FY 2026-27 and parts of FY 2027-28, every auto-component supplier carries two parallel reconciliation streams:

Legacy stream (Form 26AS, legacy 194x / 195 / 206C codes). Every FY 2025-26 and earlier deduction stays in Form 26AS for its full correction lifecycle. A Tata Motors deduction made in February 2026 under Section 194Q stays in Form 26AS even if the mismatch is discovered in October 2026 — the deductor files a correction statement under code 194Q and the corrected entry reflects in Form 26AS, not Form 168.

New stream (Form 168, codes 1001-1092). Every 1 April 2026 onwards deduction lands in Form 168 under the new code (1002, 1012, 1062, 1071). Form 16A certificates issued for FY 2026-27 reference Section 393 / 394 / 413 sub-clauses, not legacy Section 194C / 194Q / 195 / 206C.

The two streams must be reconciled separately. Never net legacy 194x entries against new 1001-1092 entries in the same register — the year-end income tax return treats them as separate credit pools under the cross-era return format.

For the official Form 168 specification and the TRACES infrastructure, refer to the Income Tax Department of India.

Tax overlay — adjacent new-framework codes auto-component teams must run

Form 168 reconciliation sits inside the broader new-framework tax-code surface for an auto-component manufacturer:

• Section 393(1)(a) code 1002 — Contractor TDS at 1% / 2% (both inbound from OEM on tooling, and outbound to Tier-2 on conversion charges)
• Section 393(1)(k) code 1012 — Purchase TDS at 0.1% above ₹50 lakh per supplier per FY (inbound from OEM on component sales, outbound to Tier-2 on raw materials)
• Section 413 code 1062 — Foreign-currency commission TDS on overseas agent payments (outbound only)
• Section 394 code 1071 — Scrap-sale TCS at 1% (outbound only) — see Section 394 TCS scrap sale auto component India

The Income Tax Act 2025 framework codes are operative from 1 April 2026. See Section 393 TDS new Income Tax Act reconciliation and TDS payment codes 1001-1092 India for the full code map.

What the auditor and the assessing officer will look for

Two distinct audit perspectives test Form 168 discipline.

Statutory auditor: tests Form 168 vs books reconciliation completeness at year-end, the dispute register’s evidence trail, and the linkage between every Form 168 entry and a source invoice in books. Failure modes the auditor will flag — unreconciled differences carried as suspense, missing deductor-correction follow-up evidence, mismatches not surfaced through quarterly review.

Assessing officer in scrutiny: tests the Form 168 credit claim in the year-end income tax return. Any unmatched credit claim flagged in the assessment requires either deductor-side correction (which can take 6 to 12 months) or denial of the credit claim. Auto-component suppliers that run continuous monthly reconciliation close mismatches inside 60 to 90 days; suppliers that wait for year-end discover unresolvable ₹2 lakh to ₹4 lakh of leakage every assessment cycle.

Continue reading

Sibling articles in the auto-component cluster:

• Section 394 TCS scrap sale auto component India
• How Indian Auto Component Suppliers Handle OEM Short-Pays
• Rule 37 ITC reversal on OEM unpaid invoices

Up the chain:

• Sub-pillar: Automotive component manufacturing reconciliation in India
• Pillar: Manufacturing reconciliation in India
• Cross-reference: Section 393 TDS new Income Tax Act reconciliation · TDS payment codes 1001-1092 India
• Money pages: auto component reconciliation software India · three-way matching software India