Why One Should Check AIS Before Filing The Income Tax Return
Filing an Income Tax Return (ITR) is not merely an obligation but a matter of good record keeping of all the financial transactions of a tax payer as it reflects his financial health. In the present tax administration system, the Income Tax Department has access to information about a taxpayer's financial transactions from multiple reporting sources. The Annual Information Statement (AIS)…
Annual Information Statement (AIS) is a vital document that provides a comprehensive view of a taxpayer's financial transactions before filing their Income Tax Return (ITR). Its primary purpose is to facilitate taxpayer feedback, promote voluntary compliance, and enable pre-filing of the return. Section 285BA in the Income Tax Act, 1961 mandates specified entities to report high-value transactions to the Income Tax Department.
These transactions include cash deposits, credit card payments, shares/mutual fund trading, and real estate transactions, among others. The AIS is sourced from various entities like banks, mutual fund houses, stock exchanges, and property registrars. Non-Banking Financial Companies also report large credit card transactions and high-value loan repayments. Additionally, foreign tax authorities may share information through bilateral tax treaties.
To ensure accurate ITR filing, taxpayers are advised to download and examine the AIS and Form 26AS, reconciling the information with their records. The Income Tax Department makes significant efforts to coordinate with various authorities providing information for AIS, verifying the correctness of information, and providing taxpayers with the opportunity to confirm or reject the data.
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