Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
TRACES is the Income Tax Department's central portal for Form 26AS, AIS, challan status, Form 16A, correction returns, and Section 206AB checks. Using TRACES only at year-end misses three quarterly reconciliation windows — Q1, Q2, Q3 — during which deductors can still file corrections before their windows close.
Run TRACES workflows at four structured points each year aligned to return due dates. Download Form 26AS XML post each quarter (31 July, 31 October, 31 January, 31 May) and match against the TDS receivable ledger. Cross-check AIS for entries pending 26AS reflection. Verify challan status pre-filing to avoid C2 corrections. Run the 206AB compliance check pre-payment for above-threshold vendors.
Quarterly reconciliation calendar keyed to return due dates. XML parser for Form 26AS structured extraction. Pre-filing challan status verifier and pre-payment 206AB compliance check workflows.
Quarterly-cleared Form 26AS mismatches caught within the deductor correction window, zero Section 200A challan-mismatch demands at filing, and dated 206AB evidence files protecting against Section 201 short-deduction exposure.
TRACES portal TDS reconciliation in India is a structured, quarterly process — not a year-end activity. Teams that download Form 26AS once a year for ITR filing miss the three quarterly windows during which deductors can still file correction returns to resolve mismatches. By the time a Q1 discrepancy is found in March, the deductor may have passed the correction return deadline, leaving the TDS credit permanently unavailable for that period.
What TRACES Handles
TRACES (TDS Reconciliation Analysis and Correction Enabling System) is the Income Tax Department’s portal for all TDS-related functions. It serves both deductors and deductees, with separate login flows: deductors use their TAN credentials; deductees use PAN credentials.
Key functions for reconciliation include: Form 26AS download (tax credit statement, per deductor, per section, per quarter); Annual Information Statement (AIS) download; challan status verification for deductors; Form 16 and Form 16A generation and download; correction return filing; and the Compliance Check tool for Section 206AB/206CCA verification.
Each function maps to a specific point in the quarterly TDS cycle. Using TRACES only for year-end Form 26AS download misses most of its reconciliation utility.
Where Quarterly Reconciliation Fails
Finance teams that download Form 26AS once at year-end for ITR filing miss the quarterly reconciliation window. By the time discrepancies from Q1 or Q2 are identified, the deductor’s correction return deadline has passed — typically within a few months of the quarter-end. The deductee is then left with a Form 26AS that does not reflect the full TDS deducted from their income, and cannot claim the credit in their ITR without an audit risk.
A second failure mode is using Form 26AS in PDF format rather than XML. PDF Form 26AS cannot be parsed automatically — each entry must be compared manually against the receivable ledger, which at 50 or more deductors per quarter becomes a multi-day exercise prone to transcription error.
A third failure mode is reconciling Form 26AS without also checking AIS. In some cases, TDS that appears in AIS has not yet reflected in Form 26AS because the deductor’s return is still being processed. A team that sees the AIS entry but finds Form 26AS silent may incorrectly flag the deductor for non-deposit when the issue is simply processing lag.
TRACES Downloads for Reconciliation
| Download Type | Path in TRACES | Format | Reconciliation Use | Frequency |
|---|---|---|---|---|
| Form 26AS | My Account > View Form 26AS | PDF or XML | Match TDS receivable ledger by TAN, section, quarter | After each quarterly return due date |
| Annual Information Statement (AIS) | My Account > AIS | PDF or JSON | Cross-check 26AS completeness; identify TDS in AIS not yet in 26AS | Quarterly; year-end |
| Challan Status (deductor) | Statements/Payments > Challan Status | Online view | Verify each challan is in OLTAS before filing return | Before each quarterly return filing |
| Form 16A (deductor generates) | Downloads > Form 16A | PDF (digitally signed) | Deductees confirm TDS certificate matches their ledger | Within 15 days after quarterly return due date |
| 206AB Compliance Check | Statements/Payments > Compliance Check | CSV output | Flag specified persons; document rate applied | Before each payment cycle above threshold |
4-Step Quarterly Reconciliation Using TRACES
Step 1: Download Form 26AS and Match to Receivable Ledger
After the quarterly return due date (31 July, 31 October, 31 January, 31 May), download Form 26AS in XML format. Extract each TDS entry by TAN, section, and amount. Map against the TDS receivable ledger in the ERP for the same quarter. Flag rows where a receivable entry has no matching 26AS credit, or where the 26AS amount differs from the expected deduction.
Step 2: Cross-Check Against AIS
Download AIS for the same period. Identify any TDS entries in AIS that do not appear in Form 26AS. These are cases where the deductor has deposited the challan but the quarterly return processing may still be pending on TRACES. Do not raise a deductor follow-up for AIS-only entries until Form 26AS is checked again 5–7 business days later.
Step 3: Verify Challan Status (for Deductors)
For the deductor side of the reconciliation, log in as a deductor and check challan status for each deposit made in the quarter. Confirm every challan shows as matched in OLTAS before filing the quarterly return. Unmatched challans must be corrected — the BSR code or serial number in the return entry must align with the actual bank deposit record.
Step 4: Run Section 206AB Compliance Check Before Return
Before filing the quarterly return, run the TRACES Compliance Check for all vendor PANs where TDS was deducted in the quarter. Retain the output. If any vendor is flagged as a specified person and the standard rate was applied, file a correction return with the correct 206AB rate and deposit the differential challan before the return is processed.
TDS reconciliation software that integrates TRACES data through the TRACES API can automate Step 1 and Step 2: Form 26AS and AIS data is pulled directly into the reconciliation engine, matched against the ERP receivable ledger by quarter and section, and exception items are surfaced without manual download and comparison.
Reconciliation software India platforms that maintain a continuous TDS receivable register — updated quarterly from TRACES rather than annually at year-end — reduce the March close exercise from a multi-week effort to a review of exception items that could not be resolved during the quarterly windows.
The Income Tax Department of India maintains the TRACES portal and publishes user guides, Form 26AS download instructions, and updated guidance on AIS and the Compliance Check tool.