Correcting Matches in Accounting Information Systems Before Submission of FY26 Income Tax Return
Taxpayers Advised to Review Annual Information Statement Before Filing Income Tax Returns
As taxpayers prepare to file their income tax returns (ITRs) for FY26, tax experts are warning them to carefully review their Annual Information Statement (AIS) before submitting their returns. Any discrepancy in these records can lead to incorrect income reporting, refund delays, or tax notices. By reconciling AIS data with supporting documents before filing the return, taxpayers can avoid compliance issues and ensure accurate reporting.
The AIS provides a consolidated view of various financial transactions linked to a taxpayer's PAN, including salary income, interest earned, dividend income, securities transactions, tax deducted at source (TDS), property transactions, foreign remittances, and other high-value transactions. Since the Income Tax Department uses AIS data to verify information reported in tax returns, any mismatch between the two may attract scrutiny.
Why Checking AIS Before Filing ITR is Important
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Reviewing AIS before filing allows taxpayers to identify errors, report missing income accurately, and rectify inaccurate entries via the feedback mechanism on the income tax portal. This is crucial as the Income Tax Department cross-verifies information available in the AIS, Taxpayer Information Summary (TIS), Form 26AS, and the ITR before processing returns.
Common Reasons for AIS Mismatch
AIS discrepancies can arise for several reasons, including:
| Reason | Description |
|---|---|
| 1. Incorrect or delayed reporting of TDS details by the deductor | TDS details reported by the deductor may be incorrect or delayed |
| 2. Duplicate transaction reporting by banks or other financial institutions | Duplicate transactions reported by banks or financial institutions |
| 3. Income belonging to a joint account holder or family member getting reflected in the taxpayer's AIS | Income belonging to a joint account holder or family member reflected in the taxpayer's AIS |
| 4. Interest income appearing in AIS but not being considered while preparing the return | Interest income appearing in AIS but not considered in the return |
| 5. Differences between information available in Form 16, Form 26AS, TIS, and AIS | Differences between information available in Form 16, Form 26AS, TIS, and AIS |
| 6. Capital gains, dividends, or other income being reported under an incorrect financial year | Capital gains, dividends, or other income reported under an incorrect financial year |
| 7. Errors or delays in data submitted by employers, banks, mutual funds, brokers, or other reporting entities | Errors or delays in data submitted by employers, banks, mutual funds, brokers, or other reporting entities |
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What Taxpayers Should Do if There is an Incorrect Entry
The Income Tax Department allows taxpayers to submit feedback against incorrect information appearing in the AIS. Through the e-filing portal, taxpayers can flag transactions that are incorrectly reported, duplicated, belong to another PAN, pertain to a different financial year, or represent non-taxable income.
Taxpayers can log in to the Income Tax e-filing portal and access the AIS section under Services. After reviewing the relevant transaction, they can select the feedback option and choose the appropriate category, such as information is incorrect, information relates to another PAN, information is duplicated, information relates to another financial year, or information is not taxable.
Consequences of Ignoring AIS Mismatches
Failure to reconcile AIS data before filing can result in discrepancies being identified during return processing. The Income Tax Department cross-verifies information available in the AIS, Taxpayer Information Summary (TIS), Form 26AS, and the ITR before processing returns. Common notices linked to such discrepancies include:
- Section 143(1)(a): Issued for adjustments arising from mismatched income, deductions, or TDS details.
- Section 139(9): Sent when the return is treated as defective and requires correction.
- Section 148: Applicable in cases where the department suspects income has escaped assessment and seeks to reopen the case.
Ignoring such notices or failing to address discrepancies may lead to additional tax demands, penalties, reassessment proceedings, and delays in refund processing.
Early Review Can Prevent Future Disputes
With tax administration becoming increasingly technology-driven and dependent on data matching, reviewing the AIS before filing the return has become an essential compliance step. Experts recommend checking the statement well in advance, reconciling all entries with supporting documents, and submitting feedback wherever required.
"Early review of AIS can help taxpayers avoid notices, delays in refunds, and unnecessary scrutiny," said Vipin Upadhyay, Partner, King Stubb and Kasiva.
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