Until a few years ago, Form 26AS reigned supreme as the document that one would rummage for a safe and compliant filing of Income Tax Returns (ITRs). But in 2021, the Annual Information Statement (AIS) was introduced and it stole Form 26AS’ thunder.

The AIS has many features in its belt, some of which are not commonly known. Here’s exploring what’s on offer.

Superior to Form 26AS

The AIS is a comprehensive statement of financial transactions of a taxpayer in a particular financial year. It is an extension of Form 26AS. It includes all that Form 26AS provides, such as tax deducted, income against which tax was deducted, Specified Financial Transactions (SFTs) and more. It has information on income from salary, rentals, interest, dividends and purchase and sale of securities, among others. It even has information on the sale of immovable properties, which will be displayed to the taxpayer at the time of filing returns.

Under SFTs, the AIS will have additional information, which one would not normally find in Form 26AS — such as, interest from savings accounts and purchase and sale of shares and units of mutual funds.

Less familiar features

While people aware of AIS, just download its PDF version and use it, there is an offline utility that can be found on the same website. Once the offline utility is installed, it would require a taxpayer to feed the AIS data in JSON format. The JSON format of AIS is also available on the same website. Once fed, the offline utility allows a taxpayer to export the data to an Excel file. This feature is extremely handy for taxpayers with a large volume of transactions to cross-check the information in the AIS with other related sources.

The offline utility also automatically distributes the total capital gain data into four quarters, plotting the gains against the quarter in which they were earned. This will help taxpayers when filling the schedule of capital gains at the time of filing ITR. It also goes on to generate an Excel file that has scrip-wise capital gains, which will be of use when filling Schedule 112A of ITR.

Another important feature of AIS that often gets ignored is that assessees can record transaction-wise feedback on the auto populated information. Giving feedback is optional and can be done both online and on the offline utility. This enables the taxman to convey mismatches, if any, to the provider of the information (such as a bank paying interest or a company paying dividend) and get them rectified. Taxpayers can choose from a list of six feedback options which include – ‘income is not fully correct’, ‘information is denied’ and ‘information relates to other year/PAN’, among others.

Until May this year, taxpayers were not privy to whether the feedback has been acted upon or not. Now a taxpayer can view (i) whether feedback has been sent to the information provider for a confirmation on the same and the date of sending, (ii) the response and the date of receipt of response. Since AIS is now used to pre-fill ITRs and has become a ready reckoner for the taxman to catch tax evasions, it is advisable to use this functionality to iron out the mismatches.

Points to note

Despite the above merits, there are certain points to be noted. While a taxpayer can give feedback on the income amount, she cannot do the same with the TDS amount. She’d have to communicate with the deductor of tax and ask for a rectification in their TDS returns.

As far as capital gains are concerned, the statement does not seem to properly capture the cost of acquisition of shares that were subject to corporate actions such as stock split, demerger, rights issue with partly paid-up shares, etc. In the case of sale of shares that were received in the demat account, not by reason of a stock exchange transaction — such as shares received as gift and shares allotted in an IPO — the cost of such shares is captured as zero in cases we came across.

Income-Tax laws permit up to three months for the taxman to upload information that goes into the AIS. Therefore, transactions that happen on March 31 might get populated only by June 30. Hence taxpayers who want to make sure that there are no mismatches, may be better off filing in July.