The Annual Information Statement (AIS) has become the starting point for filing an income tax return (ITR). The AIS captures all the income and transactions related information of a taxpayer in a given financial year reported by the employer, banks, brokers, mutual funds and other financial institutions–everything that is reported in Form 26AS, Tax Deducted at Source (TDS) certificates, Form 16A and much more. However, it is still not the single source of information that can be used to file ITR.
“It is saddled with errors and is even missing some incomes, like SGB (Sovereign Gold Bond) interest, SSY (Sukanya Samriddhi Yojana) and in some cases, accrued annual interest from FDs (fixed deposits),” pointed out Bhawna Kakkar, founder and CA, Kakkar & Co., Chartered Accountants.
Then why is AIS important to ITR filing?
Any discrepancy in what is reported in ITR and what appears in the AIS gets flagged, said Janhavi Pandit, a Mumbai-based chartered accountant (CA). “There are instances of notices being issued by the tax department in case of a mismatch between incomes or other financials reported in ITR and those appearing in the AIS. Taxpayers, therefore, can’t ignore it despite its shortcomings,” she said.
Kakkar concurred and added: “Taxpayers should use AIS as a reconciliation tool, matching every income entry with Form 16, Form 26AS, bank interest certificates, broker and mutual fund capital gains statements, and other supporting documents before filing the return.”
How to read your AIS
AIS includes details under three broad categories—income details, tax payments in the form of TDS, TCS, and advance tax, and high-value transactions, such as credit card bills over ₹10 lakh, property purchases, and foreign remittances. Experts say each entry needs to be reviewed carefully.
Income and tax payment details are directly related to ITR filing, so each income head must be tallied against the document that generated it. For example, salary should be matched with Form 16, interest income with the annual interest certificate issued by the bank, dividend income with broker or depository statements, and capital gains with the capital gains statement provided by the broker, registrar or mutual fund.
Pandit explained that gross income is reported in AIS, so it needs to be reconciled with the tax certificates. “For instance, if a bank credits ₹54,000 to a taxpayer's account after deducting ₹6,000 as TDS on FD interest, the AIS will show the gross interest income of ₹60,000. The taxpayer should report ₹60,000 as income under ‘Income from Other Sources’ and separately claim credit for the ₹6,000 TDS.”
It should be noted that the AIS is not a complete record of taxable income. Kakkar pointed out several income heads that don’t appear in AIS. “SGB interest doesn’t appear as it is paid by the RBI (Reserve Bank of India) and not banks. Similarly, SSY and PF payouts are not reported as they are usually tax-exempt. However, the taxpayer should declare these under the exempt income head,” she said.
Some other income that is not being captured in AIS this year includes accrued interest on cumulative FDs, post office and cooperative bank interest, rent where no TDS was deducted, minor child's income, gifts from non-relatives, and foreign-sourced income, Kakkar added. “Some banks report FD interest only in the year of maturity, whereas interest credited each year is taxable. But a taxpayer’s duty to declare all such incomes doesn't depend on AIS showing it,” Kakkar said.
While information on income and tax payments has a direct bearing on your tax computation, other information, such as credit card payments, purchases of securities, and other large financial transactions, has persuasive value. “The tax department cross-checks whether the income reported in ITR commensurates with the value of these financial transactions,” said Pandit. Therefore, if any such transaction is incorrect, the taxpayer must send feedback.
Major discrepancies
Any errors you see in your AIS must be reported to the tax department via feedback. This year, major errors are appearing in the form of duplicate entries and incorrect capital gains data,
Duplicate entries of the same FD interest or dividend and salary figures differing from Form 16 due to late-revised TDS returns are some of the common errors this year, as per Kakkar. “In other cases, the entire sale consideration from a jointly owned property or the full interest from a joint account is reflected against each holder instead of being apportioned according to their share.”
Capital gains remain one of the biggest areas of concern. While the AIS captures securities transactions reported by brokers and mutual funds, it may not always contain the information required to compute taxable gains. Pandit said taxpayers selling old equity investments are still finding the cost of acquisition reflected as zero because the reporting broker may not know the original purchase price. Using those figures directly could inflate the taxable capital gain.
Duplicate reporting is another recurring issue. For example, an MF sale is reported by the depository—National Securities Depository Ltd or Central Depository Services Ltd—as well as by RTAs (registrars and transfer agents) such as CAMS or Kfintech. This results in an inflated sale value that is twice the amount actually reported in AIS.
For any figures that do not tally, taxpayers should submit feedback through AIS. While AIS has become an important aid in tax filing, it does not replace a taxpayer's own records. Kakkar also advised downloading the latest AIS shortly before filing ITR, as reporting entities continue to revise information.