Tax terrorism is a known enemy of taxpayers of India. Tax disputes and assessments have instilled tremendous anxiety in the minds of the taxpayers.
Finally, the government recognised this fact and tried to simplify the tax processes by introducing annual information statement (AIS) and taxpayer information summary (TIS).
AIS is an all-inclusive information for a taxpayer displayed in Form 26AS. TIS is a category-wise information summary for a taxpayer. Seemingly, AIS and TIS represent awareness over unawareness, while submitting the return of income.
Initially, as a tax credit statement of the taxpayer form 26AS was introduced. It comprises details of advance tax paid, self-assessment tax paid, taxes deducted from the sources of income of taxpayers such as tax deducted at source (TDS) or tax collected at source (TCS), income-tax (I-T) refund received, if any, during the financial year.
The Budget 2020 proposed to expand the mandate of form 26AS and make it more thorough with exhaustive data about the taxpayers’ tax profile.
Accordingly, in May 2020, the I-T department had notified the new AIS iin form 26AS, effective 1 June 2020. All information given by banks and financial organisations was incorporated in the modified form.
Previously, these facts were included in their statement of financial transactions (SFTs).
Once again, in October 2021, to expand the range of reportable matters under form 26AS, the central board of direct taxes (CBDT) released an order, as per the provisions of section 285BB of the I-T Act.
The span of the form has been stretched to include eight new details of dealings, involving foreign remittances, income from dividend, purchase of mutual funds, purchase of securities, interest on I-T refund, off-market transactions, the complete division of salary and information from I-Tax return of another person.
According to the statement of the I-T department, form 26AS will continue to be present on the TRACES portal until the new AIS is corroborated and is fully operational.
Taxpayers can access or download new AIS by clicking on Annual Information Statement (AIS) under the ‘services’ tab on the new I-T e-filing portal (https://www.incometax.gov.in
If the taxpayer senses that the data is wrong or it relates to someone else or a different year or is a duplicate, etc, a facility has been offered to tender response online. In addition, the response can be given by submitting numerous details in bulk.
An AIS utility has also been offered for taxpayers to see their AIS and upload their responses offline. The informed value and value after response will be revealed distinctly in the AIS. In case the information is altered or disapproved, the source of the information may be communicated for confirmation.
The variety of details that is made available in AIS and TIS exhibits how the tax department is preserving 360-degree data profiling of taxpayers. This data is not less than a birth chart plotting all financial transactions of taxpayers executed in the financial year.
With the modified AIS, maximum details are now under the horizon of the I-T department. Moreover, the department has stated it also has access to data beyond what is being displayed in the AIS, which will aid tax officials to assess a taxpayer’s profile broadly and lessen the scope of evasion.
Therefore, taxpayers should wisely scrutinise all transactions shown in the AIS, so that accurate data is then shown in their tax returns. They must properly make use of the feedback offered by the department and tweak all glitches before filing their tax returns.
This will assist them to erase any duplicate or wrong details. If the taxpayer submits response on AIS after careful verification, the derived data in TIS will be spontaneously updated in real-time, and that information will be utilised for pre-filing of tax returns. Hence, taxpayers have been instructed to verify all connected information and to state extensive and precise information in their I-T returns.
If the taxpayer has already filed the I-T return and some facts have not been incorporated, the return may be revised to disclose the accurate information.
The I-T department has mentioned that if there is a difference between the TDS or TCS information or the data of tax paid as displayed in form 26AS on the TRACES portal, and the TDS or TCS data or the details about tax payment as shown in AIS on the compliance portal, the taxpayer should trust the information revealed on the TRACES portal for filing their income-tax return (ITR) and for other tax compliance objects.
Both, AIS and TIS, are anticipated to be beneficial to taxpayers in providing particulars of all the dealings and help them to be ready in advance for required discussion with tax officers. Importantly, the move will bring more clarity and detail to the financial state of the assessees. On other hand, they also provide a complete facts database to the tax authorities in a single place.
If implemented effectively, this initiative will construct a taxpayer-friendly regime and uphold the I-T department’s commitment as per taxpayers’ charter to consider the taxpayers as ‘honest’. This will also add power to the government’s endeavour of affording a seamless, painless and faceless tax administration.
(The writer is a tax specialist, financial adviser, guest faculty and public speaker based in Goa.)