Until now, we’ve had a 26AS statement, which primarily offers information on taxes deducted/collected from your income, as well as information on taxes paid directly by you. It also contains information about income tax refunds, as well as information about interest paid on such refunds.
The government now plans to broaden the extent of information available to taxpayers, making it easier for them to file their income tax forms appropriately. The AIS was created by the government with the goal of improving taxpayer compliance. The AIS is a statement of financial transactions provided to it by various entities in relation to a taxpayer, which is compiled by the tax department using the PAN.
What information is available in your AIS?
There is a widespread misconception that the government has access to all of your financial transactions and that those transactions will be reflected in the AIS. This is not the case.
The AIS has data of all the transactions that are reported by some entities under Annual Statement of Financial Transactions that they are obligated to give to the tax department, in addition to the details that are currently available to you in form No. 26AS. Banks, registration offices, regional transportation offices, authorised foreign exchange dealers, stock exchanges, mutual funds, firms issuing shares and debentures, RBI, and all taxpayers obliged to deduct and collect tax at source are among these entities.
Details of various income received by you, such as dividends, interest, rent, professional fees, and so on, are included in the transactions that are reported. Similarly, transactions for the acquisition and sale/redemption of mutual fund shares and units over a particular threshold in aggregate during the year are recorded. This includes any property purchased for more than thirty lakh rupees. It also includes bank transactions such as cash deposits, draught purchases, credit card payments, fixed deposit deposits, and so on.
What are your responsibilities?
If you discover that some of the transactions represented in the AIS do not belong to you, you can report them online, and the AIS will be adjusted accordingly, while maintaining the original information as well as the value provided by you. If you and a friend have been investing in mutual funds together, the value of mutual fund transactions reported in your AIS will be higher since mutual funds are required to disclose the value of transactions against the names of all holders, which results in data duplication to some extent. You shouldn’t be concerned in this scenario because the discrepancy is understandable. However, if you are involved in a transaction of this sort that you did not initiate, report the inaccuracy online to protect your interests.
The future of AIS is bright
The uploading of AIS to your account is part of “Project Insight,” a programme in which the Internal Revenue Service will utilise artificial intelligence to detect tax evasion. The Internal Revenue Service may ask various entities to submit the details of cash transactions done with them in the future. For example, the department may request that online retailers such as Amazon and Flipcart provide information of cash transactions over a specific threshold limit, even if the buyers’ PAN numbers are not available. The income tax authorities will be able to link such transactions to your PAN and include them in your AIS based on the address and name.
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