---
slug: tds-credit-mismatch-year-end
title: "Your TDS credit doesn't match what was deducted. Here's where it went."
h1: "TDS was deducted from you. So why can't you claim it?"
meta_description: "Every year businesses lose TDS credit they were entitled to. The money was deducted, but the credit never arrived. Here are the six causes and how to fix each one."
focus_keyword: "TDS credit mismatch Nepal"
secondary_keywords: "e-TDS return, TDS not reflecting, TDS certificate Nepal, PAN mismatch TDS"
category: tds
status: draft
schema_type: Article
review_due_on: "annually"
---

There is a specific kind of frustration that arrives at return-filing time. You know tax was deducted from your payments, because you received less than you invoiced. But when the credit is checked, part of it is not there. The money left your invoice and never arrived as a credit.

Understanding where it goes is the difference between recovering it and writing it off.

## TDS credit is not created by deduction

This is the part that trips everyone. Your credit does not come into existence because your customer deducted. It comes into existence when your customer **deposits** the amount and **reports it against your PAN in their return**.

Deduction is the customer keeping money back. Credit is the customer telling the department who that money belongs to. They are separate acts, and only the second one gives you anything.

Which means the entire failure mode is on the other side of a transaction you do not control. That is uncomfortable, and it is why the fix is always preventive.

## The six places credit goes missing

**1. Deducted but never deposited.** The customer withheld the money and kept it, whether through cash-flow trouble or disorganisation. There is no credit because the department never received anything.

**2. Deposited but not reported.** The payment went in as a lump sum, but the return breaking it down by recipient was never filed, or was filed without you in it. The department has the money but does not know it is yours.

**3. Reported under the wrong PAN.** A digit is wrong, or it was reported under a related entity, or under a proprietor's personal PAN instead of the firm's. The credit exists — it just belongs to someone else on the record.

**4. Reported in a different period.** Deducted in one month, reported in another, so the credit lands outside the year you are claiming it in.

**5. Wrong amount or wrong category.** The payment was classified under a different head, at a different rate, and the figures do not tie to your invoice.

**6. Your own records are the problem.** The deduction was recorded gross in your books, or netted off against the expense, and you are looking for a credit you never actually accounted for.

Cause 3 is by far the most common, and by far the easiest to fix — if you catch it early.

## The reconciliation, and when to run it

Once a year is too late. By the filing deadline, the customer's accounts team is busy with their own filing and a correction request goes to the bottom of the queue.

Run it quarterly:

1. List every receipt where tax was deducted, from your own sales ledger — invoice value, amount deducted, date, customer.
2. Compare it against the credit visible under your PAN.
3. For every line that does not appear, contact the customer immediately and ask for the deposit reference and the period in which you were reported.
4. Keep the reply. An email confirming the deposit voucher number is worth having whether or not the credit eventually appears.

A business that does this in Kartik gets corrections made. A business that does it in the final week gets sympathy.

## What to do about each cause

**Never deposited:** this is a debt owed to you in substance. Raise it commercially — the customer has kept money that was neither yours to lose nor theirs to keep. Get it in writing.

**Not reported:** ask them to file or revise the return that reports the deduction. Usually this is an oversight and gets fixed once someone asks.

**Wrong PAN:** ask for a correction to the return. Give them the exact PAN and registered name in writing so the correction does not introduce a second error.

**Wrong period:** it may still be claimable in the period reported. Check before assuming it is lost.

**Your own records:** fix the accounting. If TDS was netted against the expense rather than shown separately, your books understate both revenue and tax paid, which causes problems well beyond this one credit.

## Make it harder to lose in the first place

- Ask for the TDS certificate as a matter of routine, not as an exception.
- Put the requirement in your engagement terms so it is a contractual expectation, not a favour.
- Record TDS as a receivable when the deduction happens, so unclaimed credit sits visibly on your balance sheet instead of disappearing into revenue.
- Check the PAN your customer holds for you at the start of the relationship. A wrong PAN in their master data will generate the same error every single month.

That last point solves more problems than everything else combined. One wrong digit in a customer's system produces twelve wrong filings a year, every year, until someone notices.

## Frequently asked

**Can I claim credit if I hold the certificate but the credit isn't showing?** The certificate is evidence, but the credit generally follows what has been deposited and reported. Hold the certificate, pursue the correction, and take advice on your specific position.

**My customer deducted at the wrong rate. Whose problem is it?** Over-deduction means excess credit, which settles through your return. Under-deduction is primarily the deductor's exposure, but it can complicate your position, so it is worth flagging rather than ignoring.

**How long do I keep TDS certificates?** For as long as the assessment can be reopened. Keeping them digitally, filed by year and customer, costs nothing.

**The customer has closed down. Is the credit gone?** If nothing was deposited, there is no credit to claim. Take advice on whether the amount can be treated as a bad debt.

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*Rates, categories and filing timelines change with each Finance Act. This article explains the mechanism; confirm the current specifics before acting.*
