Taxpayers receive notices: Data mismatch between annual information statement and Form 26AS the reason

Why the notice?

Kirti Misal, 38, had forgotten to mention the savings bank account interest from an old account that she hardly uses. “I didn’t have the passbook or online access for that account. In the rush to file the returns, I didn’t mention the savings interest,” she says.

Since Kirti filed her return in October 2021, she didn’t have access to the AIS and has engaged a chartered accountant to respond to the notice.

“The recently-launched AIS is a comprehensive document and contains a vast amount of information such as savings bank interest, dividends. The existing Form 26 AS used to feature only the FD interest and wouldn’t capture the details of dividends. So, those who didn’t have the AIS information available before and filed the returns only based on Form 26 AS have been receiving notices,” says Karan Batra, founder, Chartered Club.

Differing amount mentioned

The differential in actual taxable amount and the reported transaction amount has led to many notices.

Ahmedabad-based Chartered accountant, Raju Shah, says, “There are many adjustment-linked notices that we have received for our clients. So, with regards to capital gains, the actual cost has been considered in AIS. But under capital gains, an indexed cost is to be considered. Due to the difference in the net and gross taxable income, an income tax notice has been received under Section 143 (1).”

Shah had to respond to the notice within 30 days, but the income tax portal wasn’t permitting uploads of response, so he resorted to the manual response method.

Similarly, there is a difference in share sale transactions too. “The value of actual taxable sale never matches as per the AIS as the gross amount is mentioned including brokerage and other costs. The notices are computerised, based on the AIS figures and hence even indexed costs aren’t considered,” says Paras Savla, partner at KPB & Associates.

“Double reporting (amount reflected under two PANs) is being done for specified financial transactions when it comes to joint holding in shares and mutual funds,” Savla adds.

What to do?

So, if you have received such a notice via email or post then check the timeline to respond to the notice and avoid delay. Assess whether the mistake is actual or a different calculation has been considered.

“For bank account interest, reporting of dividends, the tax assessee is responsible. With or without AIS, it has to be reported,” says Shah.

If the tax demand is valid, then go ahead and follow the due procedure. In case you need to file for rectification or report any mismatch, then the online option is available once you log into the new income tax portal.

How to avoid notices

If you are yet to file your tax return, then do check both the Form 26 AS and the AIS before filing the tax return. Do not forget to take into account all the bank accounts for the purpose of savings bank account interest and dividends. Remember, some income would not be taxable, but yet has to be declared in the income tax return.

This is critical in the current year, as there is no additional period for revising returns.

As Savla indicates, “If there is a mismatch issue, then this year the tax assessees do not have any option to revise the tax return as the filing due date and the window to revise one’s returns both end on December 31, 2021.”