Before filing an Income Tax Return (ITR), most taxpayers compare their Annual Information Statement (AIS) with Form 26AS. However, even if the details in both documents match, the Income Tax Department may still issue a notice under certain circumstances.
Form 26AS primarily contains details of Tax Deducted at Source (TDS), Tax Collected at Source (TCS), advance tax and self-assessment tax. The Annual Information Statement (AIS), on the other hand, provides a comprehensive record of financial transactions linked to a taxpayer's PAN, including salary, interest income, dividends, share and mutual fund transactions, and property deals.
Tax experts say that while reconciling AIS and Form 26AS is an important step before filing an ITR, it does not guarantee that a taxpayer will avoid scrutiny. The Income Tax Department may still send a notice for several reasons.
Incorrect ITR details:
A notice may be issued if salary, interest income, dividend income or capital gains are missing, incorrectly reported or partially disclosed in the return, even when the information in AIS and Form 26AS is accurate.
Wrong income head:
Reporting income under the wrong head, such as showing capital gains as "Income from Other Sources" or business income under an incorrect category, may attract queries from the department.
Excessive deduction claims:
Unusually high claims under Sections 80C and 80D, House Rent Allowance (HRA), home loan interest or capital gains exemptions may be selected for closer scrutiny.
High-value transactions:
Large bank deposits, property purchases, investments in shares or mutual funds, foreign remittances, or significant credit card spending may trigger a notice if they are not consistent with the income declared in the ITR.
TDS mismatch:
Any difference between the TDS credit claimed in the ITR and the department's records may result in an adjustment or a notice during the processing of the return.
Checks before filing
Before submitting an ITR, taxpayers should also verify the details in Form 16, salary slips and bank statements. Capital gains statements, broker reports, home loan interest certificates, investment proofs, tax challans, and records of foreign income or assets should also be reviewed to ensure that all information is accurate and complete.
What should you do if you receive a notice?
If the Income Tax Department issues a notice, read it carefully and compare it with your ITR and supporting documents. If the return has been filed correctly, respond within the specified deadline with the necessary proof. If an error is identified, rectify it by filing a revised return or following the applicable tax procedure
