The budget 2020-21 had few announcements in the Income Tax Act that aimed towards curbing tax evasion, promoting transparency and simplifying the existing tax system. Among the many proposals, one of them was to replace Form 26AS with a new Annual Information Statement (AIS).
At present, Form 26AS offers detailed information relating to the tax deducted at source, tax collected at source, self-assessment, advance taxes paid, etc. related to the taxpayers. It is a consolidated annual tax statement that can be accessed by taxpayers from the income tax website against their Permanent Account Number.
Budget 2020 announced revisions in Form 26AS thereby giving a more comprehensive profile of the taxpayers which goes beyond the existing details.
Let us find out what AIS is and how is it different from Form 26AS.
How AIS is different from Form 26AS?
While 26AS reflects only those transactions which have been filed by deductors, AIS provides a more comprehensive view of the taxpayer’s financial transactions carried out during the year derived from multiple sources. Apart from the basic information of the taxpayer, it provides detailed information regarding:
- Salary income with the breakup of various components
- Interest earned on the bank savings account
- Interest on fixed and recurring deposits
- Foreign remittances made by the taxpayer
- Dividend payout
- Off-market credit transactions reported by depository or registrar and transfer agent
- Purchase or sale of immovable properties
- Purchase of securities and units of mutual funds
- Sale proceeds of securities and mutual funds
- Tax deducted or collected at source against your PAN
- Payment of taxes
- Demand and refund, if any during the financial year
- Pending proceedings
- Completed proceedings
Since AIS offers a detailed and comprehensive view of your financial transactions, it makes the entire process of return filing simple and convenient as all your information is available at one single place.
Unlike Form 26AS, AIS reflects all the transactions irrespective of whether tax has been deducted or not. For instance, your AIS will reflect interest received on a fixed deposit even if tax has not been deducted on the same.
There is no specified limit for transactions to be covered in the AIS. It reflects every small or big financial transaction done by you which has been reported by various financial entities to the income tax department. Hence, even if you invest a small amount of Rs. 500 in a mutual fund via systematic investment plan, it will still be reflected in your AIS.
What is the reason for replacing Form 26AS with AIS?
- AIS aims to encourage voluntary compliance by the taxpayers by enabling a seamless and smooth process for prefilling of the income tax return.
- It aims to discourage non-compliance and instances of tax leakages by the taxpayers.
- AIS provides ease of access to information that was not previously included in Form 26AS. It enables taxpayers to cross-check all the financial transactions undertaken by them and in case of any discrepancy of information, it offers the facility to provide online feedback and get the information modified quickly. The online feedback facility reduces the disputes on tax returns and saves the taxpayers from the exchange of notices with the income tax department in case of a mismatch of information.
- The department aims to make the taxpayer more vigilant with the income tax return filing requirements. They will have to be diligent in calculating the exemptions and deductions.
AIS is nothing but a converged version of Form 26AS; we can call it version 2.0 of Form 26AS. It will ease your return filing process as it provides all the relevant and necessary tax-related details on various incomes in one place. Moreover, if you are not satisfied with the consolidated AIS statement, you have the option to rectify it by submitting online feedback.