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The income-tax (I-T) department has added a new feature to the Annual Information Statement (AIS). Through this new feature, taxpayers can view the status of the information verification process. “This real-time status update feature in AIS enhances taxpayer convenience and transparency,” says Vaibhav Negi, advocate, tax practice head, ABA Law Office.
What is AIS?
AIS is a comprehensive report that captures a taxpayer’s financial transactions throughout a financial year. It includes detailed information like salary, interest from savings accounts, dividends, capital gains, etc. It also has details of tax deductions, investments, and expenditures, including high-value transactions such as property purchases and large cash deposits.
“AIS aims to provide taxpayers with a consolidated view of their financial activities, ensuring greater transparency and aiding in accurate filing of tax return,” says Alay Razvi, partner, Accord Juris LLP. AIS’s new real-time feedback mechanism allows taxpayers to dispute any information that may have been filed incorrectly by the reporting agencies. “It shows whether the feedback has been shared with the reporting source, the date it was shared, the date the source responded, and the source’s response. This feature enhances transparency and helps taxpayers know if their feedback has been addressed and if any corrections are needed,” says Rohit Jain, managing partner, Singhania & Co.
Pallav Pradyumn Narang, partner, CNK says this feature can help avoid controversies on amounts reported by taxpayers in their respective tax returns.
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Difference between AIS and Form 26AS
Form 26AS can be called a subset of AIS. “While AIS and Form 26AS seem similar, they are different in that the former is a record of all the significant transactions reported by the reporting agencies. The latter is a record of incomes earned on which taxes have been deducted by the payers and deposited to the credit of the payee’s PAN,” says Narang.
Errors to watch out for in AIS
In AIS, data from various sources, including brokers, banks, and financial institutions is compiled. “This diversity of data sources can lead to discrepancies, inaccurate reporting, or duplication,” says Jain.
Duplicate entries are common. “Transactions might be reported multiple times. Ensure each transaction is accounted for only once,” says Razvi.
Verify that the amounts reported in AIS match your actual financial records. “In the past, there have been instances where the interest from a joint savings account has been reflected in the AIS of both taxpayers. There have also been instances of duplicate entries for dividends, interests,” says Shashank Sharma, advocate, Supreme Court. Transactions are at times misreported. Ensure that transactions are classified correctly and not reported under incorrect categories. Also check for financial activities that are missing from AIS but are relevant to tax filings.
Cross-check the information provided in AIS with other financial documents to identify any discrepancies. “These include Form 16 (for salaried individuals), Form 16A (for TDS on income other than salary), Form 16B (for TDS on sale of property),” says Suresh Surana, founder, RSM India. Reconciling financial transaction information with AIS before filing ITR will help taxpayers avoid inquiries from the I-T Department. “The information contained in AIS at times forms the basis of the notices issued by the I-T Department, resulting in tax demands,” says Sharma.
AIS and ITR filing
To ensure smooth and error-free tax filing, Negi suggests starting early, verifying documents thoroughly, and seeking professional assistance if needed.
Be proactive. Address any issues identified in AIS immediately. Make a timely confirmation. “Utilise the real-time status feature to confirm transactions promptly, avoiding last-minute issues during ITR filing,” says Razvi. He recommends regular monitoring.
Check your AIS throughout the financial year to stay updated on your financial transactions and tax liabilities. Surana suggests that if a taxpayer finds any discrepancy after filing the tax return, they should revise it based on correct information.
