Information contained in AIS should be cross-checked against data in various statements of financial transactions
If taxpayers receive a tax notice, they should first identify the type of notice they have received — whether it relates to return processing, defective filing, information requests, scrutiny assessment or reassessment
The Central Board of Direct Taxes (CBDT) recently asked banks, mutual funds and other reporting entities to ensure accurate reporting of high-value financial transactions in their Statement of Financial Transactions (SFT) filings for the financial year 2025–26 (FY26). Experts warn that data in the Annual Information Statement (AIS), which is based on third-party reporting, may contain duplicate or incorrect entries and should be reconciled with Form 26AS, Form 16, Form 16A, bank statements and other documents before filing returns.
What AIS shows
The AIS is a detailed financial statement available on the income-tax portal. It captures a taxpayer’s income, taxes paid, investments and high-value financial transactions carried out during a financial year. “It is populated using data reported by banks, mutual funds, stockbrokers, companies, employers and other reporting entities, largely through SFTs filed for transactions crossing prescribed thresholds. These may include large cash deposits, interest payments, high-value investments, mutual fund redemptions and securities transactions, all of which are consolidated against the taxpayer’s Permanent Account Number (PAN),” says Vishwas Panjiar, managing partner, SVAS Business Advisors.
Review AIS before filing returns
Taxpayers should review AIS before filing their income-tax returns (ITRs). “AIS helps taxpayers check whether all income streams and reportable transactions — such as interest from old bank accounts, small dividend receipts or transactions across multiple brokers — have been properly disclosed. Reviewing it can help reduce omissions and avoid future notices arising from mismatches with data available to the department,” says Panjiar.
AIS also acts as a reconciliation tool by consolidating financial information from multiple reporting sources into a single statement. It helps taxpayers identify income or transactions they may otherwise miss, such as fixed deposit interest where no tax deducted at source (TDS) was deducted, small dividend receipts, or securities and mutual fund transactions. AIS is particularly useful for individuals with multiple bank accounts, investment platforms and financial products, where manually tracking every transaction can be difficult.
Do not copy AIS figures blindly
While AIS is a useful reference document, taxpayers should not treat it as a final or error-free tax statement. It may contain duplication, incorrect classification, timing differences or wrong PAN tagging. In some cases, AIS may reflect the gross transaction value, such as the full sale value of securities or mutual funds, instead of the actual taxable capital gains. “Blindly copying AIS figures into the ITR may lead to inaccurate reporting or excess tax payment. Taxpayers should reconcile AIS data with Form 26AS, Form 16/16A, bank statements and capital gains reports before filing returns,” says Panjiar.
Watch out for common mismatches
Several types of errors and mismatches are found in AIS.
“Common mismatches include TDS-related errors, where taxpayers report income net of TDS instead of the gross amount reflected in AIS and Form 16/16A. AIS also captures foreign remittances, overseas spending, dividend income, securities trades, mutual fund transactions, large cash deposits, credit card payments and property deals reported through SFT filings. Mismatches between these transactions and declared income may trigger automated notices or scrutiny,” says Neeraj Agarwala, senior partner, Nangia & Co LLP.
Taxpayers should also reconcile tax payments, TDS, tax collected at source (TCS) credits and refund details carefully to avoid excess claims, demands or refund delays.
How to spot wrong entries
Taxpayers should treat AIS as a starting point for reconciliation. They should cross-verify AIS entries with supporting documents such as salary slips, Form 16, bank statements, interest certificates, capital gains statements from brokers, mutual fund reports, property documents and Form 26AS. “Taxpayers should especially verify dividend income, capital gains, foreign remittances, property transactions and TDS/TCS credits, as incorrect reporting may lead to notices or excess tax payment,” says Agarwala.
If taxpayers find any incorrect or duplicate entry, they should submit feedback on the income-tax portal to create a record that they flagged the discrepancy.
Check if AIS is updated
Taxpayers should ensure that AIS is complete and updated before relying on it for ITR filing. “They should particularly verify whether transactions and income for the January–March quarter have been captured, since omissions in the final quarter have previously led to automated notices and mismatches involving interest income, dividends, securities transactions and TDS entries,” says Agarwala.
What mismatches can lead to
Mismatches between AIS and actual records can lead to intimations, defective return notices, scrutiny assessments or reassessments. “Failure to explain discrepancies may also result in penalties, interest liabilities or refund delays. While AIS is an important reference document, it does not replace primary financial records and should be verified carefully before filing returns,” says Rupali Singhania, founder, Areete Consultants LLP.
How to respond to a tax notice
If taxpayers receive a tax notice, they should first identify the type of notice they have received — whether it relates to return processing, defective filing, information requests, scrutiny assessment or reassessment. “Taxpayers should carefully review the notice, cross-check it with their records and respond within the prescribed timeline through the income-tax portal,” says Singhania.
If the issue arises due to incorrect AIS data, taxpayers can submit feedback on the portal to flag the discrepancy. For scrutiny or reassessment notices, they should seek professional assistance.
Main types of tax notices
• Section 143(1): Intimation after processing of ITR
• Section 139(9): Defective return notice
• Section 142(1): Inquiry or request for information/documents
• Section 143(2): Scrutiny assessment notice
• Section 148: Income escaping assessment notice
Source: Areete Consultants
The writer is a Delhi-based independent journalist
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