What is form 26AS and AIS? Which is more important in filing tax returns?

Form 26AS and AIS (Annual Information Statement) are two vital documents for people filing income tax returns. While they serve different purposes, understanding the differences and significance is critical for accurate tax compliance.

What is Form 26AS and AIS?

“Form 26AS primarily focuses on tax-related transactions, such as tax deductions deducted at source (TDS) and tax collected at source (TCS), high-value investments, and property purchases. It acts as a consolidated statement of taxes deducted by various entities on behalf of the taxpayer and helps ensure that the taxes deducted are correctly credited to the taxpayer's PAN,” said Swati Jain CA and Strategic Business Advisor at Arihant Capital.

Verifying the information in Form 26AS is essential to avoid any discrepancies in tax payments.

On the other hand, the AIS is a more comprehensive document that extends the information provided in Form 26AS.

“In addition to tax-related transactions, the AIS includes details such as interest from savings accounts, dividends, interest on deposits, foreign remittances, and details of purchases and sales of securities and immovable property. It offers taxpayers a broader view of their financial transactions during the financial year," said Jain.

The AIS was introduced to enhance transparency and encourage voluntary compliance among taxpayers. It facilitates the " seamless Pre-Filling of Tax Returns", making tax filing more convenient and accurate.

Previously, taxpayers relied on Form 26AS to ensure that the Income Tax Department accurately records all taxes deducted throughout the financial year. Form 26AS served as a tax passbook, containing detailed information on taxes deposited with the government against an individual's PAN.

However, in November 2021, the Income Tax Department introduced the AIS, which surpasses Form 26AS in terms of comprehensiveness. The AIS not only includes tax-related details, but also provides information about income from various sources (such as salaries, interest income, and capital gains) received by the taxpayer during the financial year,” explained CA Amit Gupta, MD, Sag Infotech.

According to the income tax department's press release, if there are discrepancies between the TDS/TCS information or tax payment details displayed in Form 26AS and the AIS, the taxpayer must prioritize the information displayed on Form 26AS in order to file an ITR and compliance obligations.

“Individuals must refer to both AIS and Form 26AS when preparing their income tax returns. Form 26AS will now display only TDS and TCS information, while other taxes, such as self-assessment tax and tax filed, will be reflected in the AIS,” Gupta said.

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