Avoid penalties: Fix AIS discrepancies before submitting ITR; Here’s what to do
If your Annual Information Statement (AIS) shows incorrect data, it’s important not to ignore it. Errors or mismatches in the AIS can lead to income tax notices or even hefty penalties if left unaddressed. Before filing your Income Tax Return (ITR) for Assessment Year 2025-26, make sure to review the AIS carefully and submit feedback to correct any discrepancies.
- Jul 18, 2025,
- Updated Jul 18, 2025 9:28 AM IST
Taxpayers preparing to file their Income Tax Return (ITR) for Assessment Year 2025-26 are advised to address discrepancies in their Annual Information Statement (AIS) promptly. The Income Tax Department has outlined steps for resolving mismatches, ensuring taxpayers do not face legal or financial issues due to errors in their AIS data.
To rectify errors in the AIS, taxpayers should locate the relevant transaction and choose "Optional" or "Add Feedback" to submit corrections. The department will verify this feedback with the original reporting source, updating the AIS if the correction is confirmed. Monitoring the feedback status is crucial, as it will show as "Accepted" or "Rejected," helping ensure timely corrections. This process aids in maintaining accurate records and prevents future complications during tax filing.
On July 16, 2025, the Income Tax Department emphasized the importance of feedback, stating, "Taxpayers can provide feedback on each transaction in the AIS." They also noted that "Any disputed transaction is taken up with the reporting source for confirmation." This initiative aims to improve compliance and streamline taxpayer services. By actively engaging with this system, taxpayers can ensure their records are accurate, reducing the risk of audits or penalties.
The AIS serves as a comprehensive record of all tax-related financial activities, accessible via the Income Tax Department’s e-filing portal. It includes details such as interest from savings and fixed deposits, dividend incomes, stock transactions, and more. Ensuring all these entries are accurate is vital to avoid scrutiny from the tax department. This comprehensive overview helps in cross-verifying financial data and ensures that all income sources are correctly reported.
Neglecting AIS mismatches can lead to significant issues. For instance, if your reported income is ₹25 lakh but the AIS shows investments of ₹40 lakh, you might receive a notice requiring explanation. Failure to justify such discrepancies could result in penalties under Section 270A and interest charges under Sections 234B and 234C. These consequences highlight the importance of accurate financial reporting and proactive correction of any discrepancies.
The AIS offers a more comprehensive view of financial activity than Form 26AS, which primarily shows TDS and high-value transactions. The AIS captures data from multiple sources, including bank-reported savings interest and GST turnover shared by the GST Network, providing a holistic overview of an individual's financial activities. This extensive data collection ensures that taxpayers have a complete picture of their financial standing, aiding in accurate tax filing.
Correcting AIS mismatches is essential to maintain compliance and avoid potential inquiries from the tax department. Mismatches could indicate unreported income or errors, making it imperative to address them through the feedback option in the AIS. Proactive correction helps in maintaining a clean financial record and avoids unnecessary legal entanglements.
In summary, taxpayers should thoroughly review their AIS before filing their ITR. Any discrepancies must be acted upon quickly to prevent unnecessary legal and financial consequences. This proactive approach will help ensure the filing process is smooth and compliant with tax regulations. By taking these steps, taxpayers can safeguard against future disputes and ensure their tax affairs are in order.
Taxpayers preparing to file their Income Tax Return (ITR) for Assessment Year 2025-26 are advised to address discrepancies in their Annual Information Statement (AIS) promptly. The Income Tax Department has outlined steps for resolving mismatches, ensuring taxpayers do not face legal or financial issues due to errors in their AIS data.
To rectify errors in the AIS, taxpayers should locate the relevant transaction and choose "Optional" or "Add Feedback" to submit corrections. The department will verify this feedback with the original reporting source, updating the AIS if the correction is confirmed. Monitoring the feedback status is crucial, as it will show as "Accepted" or "Rejected," helping ensure timely corrections. This process aids in maintaining accurate records and prevents future complications during tax filing.
On July 16, 2025, the Income Tax Department emphasized the importance of feedback, stating, "Taxpayers can provide feedback on each transaction in the AIS." They also noted that "Any disputed transaction is taken up with the reporting source for confirmation." This initiative aims to improve compliance and streamline taxpayer services. By actively engaging with this system, taxpayers can ensure their records are accurate, reducing the risk of audits or penalties.
The AIS serves as a comprehensive record of all tax-related financial activities, accessible via the Income Tax Department’s e-filing portal. It includes details such as interest from savings and fixed deposits, dividend incomes, stock transactions, and more. Ensuring all these entries are accurate is vital to avoid scrutiny from the tax department. This comprehensive overview helps in cross-verifying financial data and ensures that all income sources are correctly reported.
Neglecting AIS mismatches can lead to significant issues. For instance, if your reported income is ₹25 lakh but the AIS shows investments of ₹40 lakh, you might receive a notice requiring explanation. Failure to justify such discrepancies could result in penalties under Section 270A and interest charges under Sections 234B and 234C. These consequences highlight the importance of accurate financial reporting and proactive correction of any discrepancies.
The AIS offers a more comprehensive view of financial activity than Form 26AS, which primarily shows TDS and high-value transactions. The AIS captures data from multiple sources, including bank-reported savings interest and GST turnover shared by the GST Network, providing a holistic overview of an individual's financial activities. This extensive data collection ensures that taxpayers have a complete picture of their financial standing, aiding in accurate tax filing.
Correcting AIS mismatches is essential to maintain compliance and avoid potential inquiries from the tax department. Mismatches could indicate unreported income or errors, making it imperative to address them through the feedback option in the AIS. Proactive correction helps in maintaining a clean financial record and avoids unnecessary legal entanglements.
In summary, taxpayers should thoroughly review their AIS before filing their ITR. Any discrepancies must be acted upon quickly to prevent unnecessary legal and financial consequences. This proactive approach will help ensure the filing process is smooth and compliant with tax regulations. By taking these steps, taxpayers can safeguard against future disputes and ensure their tax affairs are in order.