What taxpayers must note with Form 26AS and AIS

With the deadline for the income-tax return-filing season ending in a few weeks from now, gathering all information for completing the process smoothly is a key task for taxpayers.

Two forms are critical to ensure that all the details you need to file the return are available.

Form 26AS and AIS (Annual Information Statement introduced in 2021) available in the tax portal are expected to capture all the data of your relevant financial transactions.

Now, each of these forms is important and the AIS itself complements the form 26AS in the details that are captured.

Read on for more on these two forms and what you must note, to accurately file your returns.

What form 26 AS could miss

Perhaps the most important form even when the AIS has come along is the form 26AS.

It captures all details of tax deducted at source (TDS) and tax collected at source (TCS) by various entities – employers, banks, EPFO and other financial institutions, among many others.

The details of all salaries paid, interest earned from deposits, high-value purchases, property transactions — basically any entity that has deducted tax on your payments under your PAN will figure in the form 26AS.

This form should be your first stop to checking if all the tax deducted is accurately stated.

But there is one key challenge in this form. There would be times when there would be no deduction of tax at source.

For example, you may have given form 15G/H to your bank or the company whose stocks you hold and receive dividends from, asking it not to deduct tax as your slab is in the lowest threshold.

Small-savings schemes also do not deduct tax and source. But interest is still being earned by you as an investor in, say, SCSS or NSC.

Then, there may be the case of pensioners where their employers may not deduct tax as they may have opted for the new tax regime to enjoy a higher threshold, or their income may be below the basic threshold even in the old regime.

In all of these cases, you must report the additional income or interest in full and pay the applicable tax additionally, if required.

AIS fills many gaps

As indicated earlier, the AIS complements the form 26AS. While the AIS contains all the details that form 26AS captures, it also holds a lot more information of financial transactions and is also more in-depth.

Apart from all income sources, dividends, and financial transactions, AIS also captures your savings bank interest, which is not available in the form 26AS.

All these aspects are available in a section called SFT (Statement of Financial Transactions).

In addition, all your mutual fund and stock sales as well as securities transaction tax paid in a given financial or assessment year are made available with their full values.

There is also a bit of detailing here. So, if you receive a salary, the AIS gives the wage received and TDS deducted. But if you are self-employed or a freelancer and receive fees for your services, you would see the payments you received under Section 194J for professional and technical services.

Between the two forms, you will have all that you need to file your returns. Since the tax department generally frowns upon mismatches between returns filed and the details available in the two forms, you must take care to rectify any error quickly.

Also, incomes not captured must also be reported in full while filing your returns.

You may not want to be at the wrong end of the taxman’s stick trying to defend unreported income or accusations of wanting to dodge taxes.

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