Tax returns: All about annual information statement 2.0

J.B. Mohapatra, former chairman of the Central Board of Direct Taxes, said taxpayers used to struggle to get this information earlier but now have it at their fingertips, and the same is taking them towards voluntary compliance.

What is AIS?

The statement contains financial transactions reported by banks, RTOs, stock exchanges, etc., with the Income Tax (I-T) department. AIS is divided into two parts: Part A contains the taxpayer’s general information, including name, PAN, Aadhaar number, date of birth, etc. Part B contains information on tax deducted at source (TDS), tax collected at source (TCS), 53 specified financial transactions (SFTs), payment of taxes, rent on plant and machinery, winnings from lottery, crossword puzzle or horse race, receipt of accumulated balance from provident fund (PF), interest from bonds, government securities, offshore fund, shares of Indian companies, insurance commission, and demand and refund, among others.

The I-T department released a much improved Version 2.0 of AIS in March 2022 that covers many more transactions, including interest, dividend, securities, mutual fund transactions, etc. In the new version, the department has used data analytics to capture non-PAN transaction data, eliminated duplicate entries and generated a simplified TIS for ease of filing return for taxpayers. Further, taxpayers can use the AIS mobile application to view the statement and also upload their feedback.

To access AIS, taxpayers should log in to the I-T e-filing website www.incometax.gov.in. Under the services tab, they should select AIS, which will redirect them to the AIS homepage. This screen provides instructions on both AIS and taxpayer information summary (TIS). TIS is a simpler version of AIS, which displays the information on financial transactions category-wise, and as original and revised values, which are essentially those values processed after the taxpayer’s feedback is received, if any. 

Post logging in, a taxpayer can download the said statements in PDF, JSON or CSV formats for reconciliation purpose.

How is AIS  different from Form 26AS?

Compared to Form 26AS, AIS is more comprehensive wherein the transactions will be reflected irrespective of whether applicable tax has been deducted or not.  This means, even if tax has not been deducted on the interest income received on a fixed deposit, it will still be shown there. Similarly, other transactions, sale, purchase of equity, mutual funds, dividend, etc. without any such monetary limit are reflected, which is not in the case of Form 26AS where it contains only TDS, TCS, and SFTs but only if those transactions have crossed a certain limit. Essentially, a small investment of 2,000 in a mutual fund systematic investment plan, or SIP, or even a receipt of 50 as dividend income will be reflected in the AIS. In other words, all your financial transactions are under the surveillance of the I-T department.

Though AIS is comprehensive, taxpayers will still have to reconcile all three —AIS, TIS, & Form 26AS—with their personal records. As per the I-T department’s initial comments, Form 26AS will continue to exist until the new AIS is validated and is completely operational. Till such time, all three will co-exist.

What feedback can a taxpayer submit?

Taxpayers who feel that the information reflected in AIS is not in consonance with their records can submit their response with the correct information. Feedback can be given for all entries in the statement, besides personal details as well as financial transactions. Taxpayers should submit such feedback as soon as they notice any mismatch. It can be done at the ‘Optional’ tab provided therein. 

When taxpayers submit their feedback, the same will be updated on AIS on a real-time basis. Those revised values filtered in TIS will be pre-filled in the yet-to-file draft of ITR. 

In a case where the feedback is modified or denied, it will be processed after due process. In the case of high-risk feedback, the same will be flagged for seeking confirmation from the information source. Taxpayers should note that flagging any mismatch or wrong information purely rests with them. If they do not give any feedback, then the original information reflected in the AIS will be assumed to be correct, and in case of any mismatch, the department may insist that the taxpayer explains the discrepancies.

Prabhakar K. S. is founder and CEO, Shree Tax Chambers

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