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AIS displays all of your digital financial transactions that the IRS is aware of.
On November 1, 2021, the Internal Revenue Service introduced a new statement for taxpayers called the Annual Information Statement (AIS). According to chartered accountants, the new AIS will disclose details of the taxpayer’s most digital financial transactions within a financial year (FY).
The AIS contains more information than the Form 26AS, commonly known as a tax passbook, which is provided to a taxpayer.
Here’s all you need to know about AIS, including how it differs from Form 26AS.
What exactly is AIS?
The AIS is a detailed statement that lists all of your financial transactions that were reported to the IRS by various entities (primarily financial institutions) during the fiscal year. This comprises earnings from a variety of sources, such as salary, interest, and the sale or purchase of securities, such as stock, mutual funds, and bonds. The AIS, for example, will show any sale or purchase of shares or mutual fund units, as well as any dividends or interest received.
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Part A and Part B are the two portions of AIS. Part A provides general information such as the taxpayer’s PAN, masked Aadhaar number, name, date of birth, and so on. TDS, TCS, Specified financial transactions, tax payment, tax demand and refund, and other information are all included in Part B.
The tax department noted in a press statement that taxpayers will be able to download AIS information in PDF, JSON, and CSV forms.
In addition to AIS, the IRS also introduced the Taxpayer Information Summary (TIS). This is a condensed version of the information from the AIS. According to a news release from the IRS, “TIS displays the processed value (i.e., the value obtained when information is deduplicated using pre-defined rules) as well as the derived value (i.e. the value derived after considering the taxpayer feedback and processed value). If the taxpayer provides input through AIS, the resulting data in TIS will be used to pre-fill the Return (pre-filling will be activated in stages).”
As a result, if you find an inaccuracy in your TIS or AIS, you must rectify it in the AIS, which will be corrected in real-time in the TIS as well. It is critical to review the AIS and provide input. If there is an error and you have not provided feedback seeking rectification, the income tax department may assume that the information reflected in the AIS is correct, and you may be asked to explain the discrepancy between your income tax return and the information in the AIS.
“A facility has been provided for the taxpayer to submit online comments if they believe the information is erroneous, relates to another person/year, or is duplicate. It is also possible to provide feedback by submitting information in bulk “According to the press release.
What is the difference between AIS and Form 26AS?
The TDS and TCS deposited against the taxpayer’s PAN during the financial year are listed on Form 26AS, which is similar to a tax passbook. Furthermore, information linked to specific transactions such as mutual fund unit purchases, overseas transfers, and so on will be reflected only if the transaction exceeds the stipulated limit or if tax has been deducted in the modified version of Form 26AS. For example, if tax has been deducted from a fixed deposit’s interest, it will be reported in Form 26AS.
The AIS is a more comprehensive system. In the case of AIS, transactions will be reflected regardless of whether or not tax has been deducted. As a result, even if interest on a fixed deposit has not been taxed, it will still appear in the AIS. TDS, TCS, sale, purchase of stock shares, mutual funds, dividend, interest income, and other items will be reflected on the statement. The number of transactions that can be included in the AIS is not limited. As a result, even if you put Rs 2,000 in a mutual fund SIP, your AIS would reflect it. AIS essentially represents all of your little and large specified financial transactions that have been reported to the IRS by various financial companies. These entities are required by law to report in this manner. As a result, AIS displays all of your financial transactions that the Internal Revenue Service is aware of.
How can AIS assist taxpayers?
Naveen Wadhwa, DGM, Taxmann.com, a chartered accountant, states, “All financial transactions are displayed in AIS, including salary income, dividend income, interest income from savings and fixed deposits, sale and purchase of stocks, and so on. It would be simple for a taxpayer to report the correct information in their income tax return with the support of all of this financial information. The taxpayer can prevent a discrepancy between the data reported on the income tax return and the real financial transaction.”
“If you earned Rs 50 as a dividend from stock shares, the AIS will reflect this financial transaction. Similarly, the AIS will reflect all TDS and TCS deposited against your PAN during the financial year “Wadhwa says.
With the aid of AIS, you may double-check all of your financial transactions before reporting them to the income tax authorities. This will make it easier for you to double-check and record all of the needed information on your tax return. Dividends received in FY 2020-21, for example, are taxable in your hands. As a result, even if the sum is as low as Rs 50, you must disclose it in your ITR and pay tax on it. If you forget to report this Rs 50, the AIS will assist you remember.
In a press release, the Internal Revenue Service stated, “When filing the ITR, the value displayed in the Taxpayer Information Summary (TIS) may be taken into account. If the ITR has already been filed and some information has been left out, the return may be updated to add the missing information.”
“In the event that there is a discrepancy between the TDS/TCS information or details of tax paid as displayed in Form26AS on TRACES portal and the TDS/TCS information or details of tax paid as displayed in AIS on Compliance Portal, the taxpayer may rely on the information displayed on TRACES portal for the purpose of filing ITR and other tax compliance purposes,” the press release stated.