Tag: AIS MISSING

Addressing Challenges with Advance Tax Payments: CBDT’s Guidance on AIS Compliance

Many taxpayers are facing challenges with their advance tax payments due to inaccuracies in their Annual Information Statements (AIS). The Central Board of Direct Taxes (CBDT) has recognized this issue and advised taxpayers to await updated data on the ‘AIS Compliance Portal‘, especially concerning financial data related to stock market and mutual fund transactions.

The CBDT has stated on the AIS Compliance Portal website that data related to categories such as the sale and purchase of securities and units of mutual funds, as well as off-market credit and debit transactions, is being updated. With the fourth instalment of advance tax for individuals due on March 15, 2024 for FY 2023-24, individuals may be concerned about potential penalties arising from any discrepancies. However, experts reassure taxpayers that there is no need to worry about paying advance tax based on incorrect AIS transaction values.

It is emphasized that taxpayers should pay their advance tax liability based on their own evidence and data, irrespective of any discrepancies on the AIS Compliance Portal. There is hope that the data inconsistencies will be resolved before the income tax return (ITR) filing dates.

Furthermore, experts clarify that no penal interest will be charged for non-payment of advance tax due to incorrect AIS transactions. Taxpayers are advised to pay advance tax based on their own calculations, as there is no provision for levying interest on shortfalls in advance tax payment resulting from incorrect data on the AIS Compliance Portal. It’s important for taxpayers to exercise caution and not overpay their advance tax liability to avoid unnecessary financial strain.

The severity of the glitch affecting taxpayers’ data is evident in cases where AIS shows significantly inflated transaction values for the sale of shares, mutual funds, and property compared to the actual values. Such discrepancies can amount to a substantial sum, as observed in real-life cases. Taxpayers are strongly cautioned against relying solely on AIS for advance tax computation, given its potential inaccuracy due to these errors.

In the event that the error is not resolved automatically, the Income Tax Department advises taxpayers to calculate advance tax using their own data. Additionally, while AIS and Form 26AS can help reconcile income and TDS, primary sources of information such as bank statements, demat statements, and interest certificates should be the primary reference points. If discrepancies persist, taxpayers are encouraged to provide feedback to the Income Tax Department through the AIS Compliance Portal to notify them about the observed discrepancies.

How to Correct Errors in your Annual Information Statement (AIS)

The Annual Information Statement (AIS) is a comprehensive statement containing details of financial transactions done by you, irrespective of whether tax has been deducted or not. AIS was launched by the income tax department in November 2021. The AIS informs a taxpayer about information that the income tax department has received from various financial entities during the financial year. Click here to read about what information the AIS will contain.

The information in one’s AIS is pre-filled with details (as mandated by law) shared by financial entities like banks, mutual fund houses, your employer regarding the TDS that has been cut from your salary and various sources of income such as dividend, interest (even if tax is not deducted) during a financial year.

In case there is an error and you have not given feedback requesting a correction, then it may be assumed that the information reflected in AIS is correct and the income tax department may ask you to explain the mismatch between the income tax return filed by you and the information in the AIS.

If the taxpayer feels that the information is incorrect, relates to other person/year, duplicate etc., a facility has been provided to submit online feedback. Feedback can also be furnished by submitting information in bulk,” stated a press release issued by the Central Board of Direct Taxes (CBDT) issued on November 1, 2021.

Here is a look at how you can correct errors in your AIS.

What if there is an error in AIS?
In case a taxpayer finds an error in his/her AIS, as mentioned above, the taxpayer should provide online feedback for the same. Follow the steps below to correct the mistakes in AIS.

Step 1: Login to your e-filing account on the government’s portal at http://www.incometax.gov.in

Step 2: Once logged in, select ‘Annual Information Statement (AIS)’ under the ‘Services tab.

Step 3: On the webpage, select ‘AIS’. On your screen, two options will be visible to you – Taxpayer Information Summary (TIS) and Annual Information Statement (AIS). Click on AIS.

Step 4: On your screen, Part A and Part B of AIS will be shown. Select the information that is not correct. Select ‘Optional’ to submit your feedback.

Step 5: From the drop-down menu, select the option which is applicable to you. There will be 7 options available to you:
a) Information is correct
b) Transfer not in the nature of sale
c) Income is not taxable
d) Information is not fully correct
e) Information relates to other PAN/Year
f) Information is duplicate/included in other information
g) Information is denied

You might be asked for additional information depending on the option selected by you.

Step 7: Click on submit.

Once the feedback is submitted, the income tax department will automatically correct the information in your AIS. You might need to provide additional information depending on the option selected by you from the drop-down menu.

Tax Payment Information: Changes in Form 26AS and How to Reconcile Missing Details

While filing your income tax return (ITR) this year, it may happen that certain tax payments such as advance tax will be missing from Form 26AS. Up until last year, i.e., AY 2022-23 (FY 2021-22), the details of advance tax and self-assessment tax payments were available in a taxpayer’s Form 26AS.

As per chartered accountants, from this year AY 2023-24 (FY 2022-23), details of advance taxes and self-assessment taxes paid by a taxpayer will not be available in Form 26AS. Instead, one will have to refer to their Annual Information Statement’s (AIS) and Taxpayer Information Summary section (TIS) for the same.

The income tax department on its e-filing website said, “From AY 2023-24 onwards, Form 26 AS display only TDS/TCS data. Other taxes like advance tax, Self-assessment tax, refund, etc would be available in Annual Information Statement (AIS).”

Under income tax laws, if your annual tax liability (estimated total tax liability less of TDS) is above Rs 10,000 in a financial year, then you will have to pay advance tax in four prescribed installments. Missing these advance tax installments has penal consequences.

The problem: Missing information

For the present year, the income tax department has removed all the tax-paid-related information from Form 26AS. As mentioned above, a taxpayer filing their ITR on their own should refer to their AIS and Form 26 AS (for TDS and TCS) to reconcile and gather data about total tax deposited against their PAN for FY 2022-23 (AY 2023-24).

The reconciliation can be done from the challan that is generated while making tax payments.

According to Maneet Pal Singh, Partner, I.P. Pasricha & Co, a Delhi-based CA firm, “Due to this missing information issue, taxpayers who file their ITR without using the services of a professional might find it difficult as he/she will be required to collate the information pertaining to advance taxes paid by him in different installments during the year and self-assessment taxes. It just added an extraneous effort to be put in while filing ITR for this season.”

“In the case of certain taxpayers, even the AIS is not showing tax paid details accurately or there is tax payment information missing,” said Archit Gupta, founder and CEO, Clear, a tax filing assistance company.

What to do if tax paid information is missing?

According to Gupta from Clear, “Taxpayers must first look at their AIS and make sure they are able to spot taxes paid, or else approach the income tax department well in time to rectify if there is any missing information.”

You can put in a data correction request if you have missing tax paid information in your AIS/TIS by logging into- http://www.incometax.gov.in and selecting ‘Annual Information Statement (AIS)’ under the services column.

According to Singh, “Since taxes paid information now can’t be auto populated from form 26AS, the Chartered Accountants or any person filing the ITR will have to cross-check and fetch the challans and manually fill the details of taxes paid.”

Checking the tax payment challan is more accurate than relying completely on the details in one’s AIS. This is because if by any one-off chance the AIS missed the record of a particular advance tax or other payment details, it may lead to the payment of extra taxes, which means you will have to file a revised ITR to claim the refund.

For example, there have been cases previously where people paid the taxes online using challan 280 but put in the wrong assessment year. So, in this case, the AIS for FY 2022-23 (AY 2023-24) will not show this payment.

“Earlier, such tax payment credit used to get auto populated in ITR Form and automatically got adjusted against the tax liability for the year under consideration. Now onwards, it has to be filled manually by the person filing the ITR,” said Singh.