TRACES Portal Walkthrough — Complete Guide for Deductors + Deductees (FY 2025-26)

What TRACES is

TRACES (“TDS Reconciliation Analysis and Correction Enabling System”) is the centralised portal operated by the Directorate of Income Tax (Systems), Centralized Processing Cell (CPC-TDS), at https://www.tdscpc.gov.in.

It is the operational backend for everything TDS / TCS-related: quarterly return processing, certificate generation (Form 16 / 16A / 27D), default + demand notification, correction statement filing, justification reports, and the consolidated tax-credit statement (Form 26AS) that every deductee uses to verify their TDS credits before filing the ITR.

For the broader TDS framework context, see the TDS in India overview.

Login — deductor (TAN) vs deductee (PAN)

TRACES has two distinct login paths based on the user’s role in the TDS transaction:

Deductor login (TAN-based)

For employers, businesses, and individuals required to deduct TDS — the entity that withholds the tax from the payee. Registration + login uses the 10-digit Tax Deduction and Collection Account Number (TAN).

Deductee login (PAN-based)

For salaried employees, freelancers, contractors, vendors, and any taxpayer from whose income TDS was deducted by a third party. Registration + login uses the 10-digit Permanent Account Number (PAN).

Some workflows are deductor-only (downloading Form 16A to issue, filing correction statements, viewing defaults). Some are deductee-only (downloading Form 26AS, raising grievance for missing TDS credit). Form 26AS is the most commonly used deductee feature.

Deductor workflows

Form 16 / 16A / 27D download

After filing quarterly TDS / TCS returns and the return being PROCESSED (not just filed) by CPC-TDS:

• Form 16 — salary TDS certificate, issued annually to salaried employees, based on Form 24Q quarterly filings
• Form 16A — non-salary TDS certificate (covers Section 194C contractor, 194J professional, 194Q goods, 194T partner remuneration, etc.), issued quarterly based on Form 26Q
• Form 27D — TCS certificate (Section 206C scope), issued quarterly based on Form 27EQ

Critical prerequisite: the certificate is downloadable only after CPC-TDS has marked the underlying quarterly return as PROCESSED. The typical lag is 7-15 days from filing to processing. Trying to download earlier returns an error.

Bulk download: for large workforces, TRACES supports bulk Form 16A generation via text / ZIP file format — authenticated via Digital Signature Certificate (DSC) or KYC validation (challan reference + PAN).

For the certificate landscape across all forms, see Form 16 vs Form 16A reference.

Correction statement filing

Data-entry errors in a filed Form 26Q (or 24Q / 27Q / 27EQ) are corrected via the Online Correction module on TRACES — no need to file a paper return or visit the AO. Correction types:

• PAN correction — fix a wrong PAN entered for a deductee. Subject to a percentage cap on the number of corrections allowed per return.
• Challan correction — reallocate tax across challans, update challan date, update BSR code.
• Deductee correction — update tax amount, section code, payment date, or add a missing deductee record.
• Default correction — settle short-deduction / short-payment defaults raised by CPC.

A correction statement requires the original return’s Token Number (Provisional Receipt Number) — locate it from the original filing receipt or the “Statements / Payment Status” tool in TRACES.

Default + demand viewing

CPC-TDS continuously cross-references filed returns against deposited tax and applies the relevant default categories. Defaults appear under “Outstanding Demand”:

• Short deduction (Section 201(1))
• Short payment of tax
• Interest on delayed deduction (Section 201(1A) — 1% per month or part thereof)
• Interest on delayed payment (Section 201(1A) — 1.5% per month or part thereof)
• Section 234E late filing fee
• Late fee on correction filings

Justification report

The Justification Report is a downloadable text / Excel file that itemises every default category, the calculation behind it (days × rate × tax base), and the row-level deductee records that contributed. It is the deductor’s primary tool for understanding why CPC raised a demand and what remediation is needed (pay additional tax / interest, file a correction, or contest with reasonable cause).

Deductee workflows

Form 26AS download

Form 26AS is the deductee’s consolidated statement of tax credits:

• TDS deducted by deductors (employer, vendor payers, banks on FD interest, tenants u/s 194-IB, etc.)
• TCS collected by sellers under Section 206C
• Advance tax + self-assessment tax paid by the deductee directly
• Refunds issued during the FY
• High-value transactions reported under Section 285BA (selective categories)

Available for download from TRACES (PAN login → View Tax Credit (Form 26AS)). Also accessible from the Income Tax e-filing portal’s “View Form 26AS” link, which redirects to TRACES.

TDS credit verification

Before filing the ITR, the deductee should reconcile the TDS credits claimed in the return against Form 26AS. The ITR portal’s auto-populated TDS schedule pulls from Form 26AS — but the deductee should verify each row matches the underlying invoice / payment records. Discrepancies typically have two causes:

• Deductor entered a wrong PAN → credit went to a different (or null) PAN
• Deductor entered the wrong financial year / quarter → credit landed in the wrong period

Grievance raising

For unresolved missing-TDS-credit issues, the deductee can raise an online grievance on TRACES against the specific deductor + FY + quarter. The grievance is routed to the deductor + visible to the AO, creating institutional pressure on the deductor to file a correction statement.

Form 26AS vs AIS vs TIS

Three parallel tax-information documents serve different purposes:

Document	Hosted on	Scope	Best used for
Form 26AS	TRACES portal	TDS + TCS + advance tax + self-assessment tax + refunds + selected high-value transactions (Section 285BA)	Reconciling TDS credit to claim in ITR
AIS (Annual Information Statement)	Income Tax e-filing portal (under Section 285BB)	Comprehensive — TDS + capital gains from depositories + foreign remittances (LRS) + interest from banks/PO + dividends + securities transactions + property transactions + much more	Reviewing total income picture; spotting transactions the taxpayer may not have included in the ITR
TIS (Taxpayer Information Summary)	Income Tax e-filing portal	Derived from AIS — aggregated single-page summary by income category	Quick overview; feeds the auto-populated ITR utility

Practical workflow: use Form 26AS for the strict TDS reconciliation. Use AIS to cross-check that all income reported in AIS is also in the ITR — particularly capital gains + bank interest + dividend that the taxpayer might overlook.

Common error scenarios

”Form 16A not available” / “Form 26AS not updated”

Cause: the underlying Form 26Q has been filed but not yet PROCESSED by CPC-TDS. Processing lag is typically 7-15 days.

Fix: wait for processing. Status visible on TRACES deductor dashboard under “Statement Status.”

PAN-mismatch on TDS credit

Cause: deductor entered an incorrect PAN in their Form 26Q deductee record.

Fix: deductee cannot fix this directly. Request the deductor to file an Online PAN Correction on TRACES. Credit reflects in the deductee’s Form 26AS within 7-15 days of correction processing.

Token Number issue on correction statement

Cause: the Token Number supplied for an Online Correction is incorrect, expired, or copy-pasted with whitespace.

Fix: retrieve the definitive Token Number from the original filing receipt OR from “Statements / Payment Status” tool on TRACES (which lists every accepted return + its Token Number).

TAN account locked after failed login

Cause: three consecutive incorrect login attempts.

Fix: auto-unlock after 24 hours, OR reset via “Forgot Password” (requires TAN + a valid Token Number from a prior accepted return for validation).

Justification Report not generating

Cause: request submitted before CPC has finished processing the relevant return.

Fix: wait for processing; re-request after status transitions to “Processed.”

Section 234E late fee — calculation + response

Section 234E applies an automated, mandatory late filing fee of ₹200 per day for every day the TDS / TCS return is filed beyond the statutory deadline. Cap: the aggregate Section 234E fee cannot exceed the total TDS / TCS for that quarter.

234E is not appealable through standard grievance channels — it is a statutory fee, not a penalty. The response workflow:

1. Download the Justification Report from TRACES to confirm the exact day count + fee calculation
2. Pay via Challan ITNS 281 under the “Late Fee” minor head, against the relevant TAN + assessment year + quarter
3. File an Online Correction linking the paid challan to the late-fee row, which squares the liability

Separately, Section 271H can levy a penalty of ₹10,000 to ₹1,00,000 for non-filing beyond one year (or for incorrect return information). 271H is appealable on reasonable-cause grounds, unlike 234E.

Justification Report — default categories

When reading a Justification Report, the defaults itemise into specific categories. Common ones:

• Short Deduction (Section 201(1)) — deducted at a lower rate than legally required. Example: deducted 1% under Section 194C on payment to a partnership firm where 2% applies. Liability = differential tax + Section 201(1A) interest.
• Short Payment — tax declared in the return but cash deposited via challan is less than declared. Pay the differential.
• Interest on delayed deduction (Section 201(1A)) — 1% per month or part of a month from the date when tax should have been deducted to the date when actually deducted.
• Interest on delayed payment (Section 201(1A)) — 1.5% per month or part of a month from the date of deduction to the date of actual deposit.
• Late filing fee (Section 234E) — ₹200/day until the return is filed.

For 194C-side and 194J-side technical context, see the Section 194C and Section 194J spokes.

Practical timeline — from filing to certificate download

A typical lifecycle for a Q2 FY 2025-26 Form 26Q:

Day 0 — File Form 26Q on TRACES (due 31 Oct)
   ↓
Day 7-15 — CPC-TDS processing completes; status → Processed
   ↓
Day 8-16 — TDS credits reflect in deductees' Form 26AS
   ↓
Day 11-30 — Form 16A available for deductor to download from TRACES
   ↓
Day 11-45 — Deductor issues Form 16A to deductees (statutory 15 days from Form 26Q due date)

Promising a vendor or contractor that Form 16A will be available within 48 hours of filing Form 26Q is operationally infeasible — the 7-15 day processing window cannot be compressed.

For ongoing quarterly Form 26Q filing + TRACES correction handling + Justification Report response, see the TDS Return Filing service. For the cross-section TDS rate reference, see the TDS Rate Chart FY 2025-26.