Submitted Tax Return but Modifying AIS May Fetch Tax Notice: Managing Changes and Amending Returns

Approximately 6.77 crore income tax returns (ITRs) were submitted for FY23 by the July 31 deadline. Nevertheless, taxpayers should remain cautious, as the evolving Annual Information Statement (AIS) could result in notices or intimations for some individuals. Experts highlight the challenges in dealing with the AIS form during both the filing and post-filing phases of returns.

The Annual Information Statement (AIS) was introduced in March 2023 alongside the e-verification scheme, and it has become a key component of the ITR filing process. 

Even during the return filing stage, taxpayers might receive notices requesting clarifications based on the information collected by the AI tool. Therefore, if individuals have already filed their returns by July 31, they should reconfirm the AIS data. 

If discrepancies arise in the AIS data of the other party and a revision request is issued, taxpayers must also amend their returns accordingly, as explained by Avinash Shekhar, CEO and Founder of TaxNodes, a cryptocurrency accounting and taxation company.

What is AIS?

AIS, or Annual Information Statement, is a recent addition introduced by the Income Tax Department in November 2021. It compiles a taxpayer's financial transactions for a fiscal year, encompassing various aspects like income, dividends, securities, investments, and expenditures. The collected data is presented in Form No - 26AS within the taxpayer's registered account. The key objectives of AIS are as follows:

• Annual information statements display all the details to taxpayers and capture their online feedback.
• It aims to encourage voluntary compliance and advance prefilling of returns.
• It would deter non-compliance from the taxpayers.

How to Check Your AIS?

• The first step is to visit the income tax e-filing portal and log in to your income tax account. 
• Go to the menu bar & click on ‘service’. After this, click on the ‘Annual Information Statement’ available at the bottom of the drop-down list. 
• You will see a pop-up tab redirecting you to the AIS Homepage on the compliance portal. Click on the ‘Proceed’.
• After being redirected to the compliance portal, you can see Taxpayer Information Summary (TIS) and Annual Information Statement (AIS) on the home page. 
• Next, you have to choose the relevant financial year. Then you can view & download the Taxpayer Information Summary (TIS) or the Annual Information Statement (AIS) by clicking the relevant tiles.
• Click on the ‘Download’ tab to download it in PDF or JSON formats.
• Annual Information Statement enables both the taxpayers & Government to keep track of their financial activities and all transactions carried out in a financial year. 

Managing Updated Information in AIS: Tips for Taxpayers

AIS is a flexible form that could mix up data and include unfamiliar or forgotten details. Hence, it's crucial to double-check AIS accuracy before submitting the ITR.

For instance, a taxpayer noticed interest income appearing in her closed bank account from a decade ago, which was reflected in her AIS statement post-filing taxes.

To avoid unnecessary actions or tax notices, it's advisable to file an updated and accurate revised income tax return, if needed. This year, there might be numerous revisions in return filing based on client-provided data. 

Taxpayers could receive a notice from the tax officer seeking clarification on the data reported in the Income Tax return," Shekhar explained

Responding to E-Verification Notices and Managing AIS Data

The e-verification scheme's system collects data and verifies its accuracy. If any differences arise in the filed returns, notices are sent to taxpayers. About 66,000 taxpayers got e-verification notices last year. If taxpayers receive a notice, they must respond and correct it within the specified time.

Taxpayers should review AIS and provide feedback for timely correction. If there's a difference between TDS/TCS/tax payment details in Form 26AS on the TRACES portal and AIS on the compliance portal, taxpayers can rely on the TRACES portal info for filing returns and other tax duties.

Furnishing feedback is optional for taxpayers to rectify discrepancies, not a mandatory obligation before filing a return. Furthermore, the Income Tax Act does not specify penalties for not providing this feedback. 

However, it's advisable for taxpayers to notify the tax department if any discrepancies are identified.

Also Read: ITR Processing Under Section 143(1): A Detailed Gudie