New Delhi: Taxpayers filing Income Tax Returns (ITR) have been advised to carefully verify details reflected in key tax documents such as Form 16, Form 26AS and the Annual Information Statement (AIS), as discrepancies in reported income or tax credit claims can attract scrutiny from the Income Tax Department. Tax experts have highlighted that inconsistencies between financial records and ITR filings are among the common reasons for post-filing notices and inquiries.
Salary income mismatch may invite scrutiny
One of the most frequently reported issues involves differences in salary income details.
Tax experts state that when the salary amount disclosed in an ITR differs from the information available in Form 16, Tax Deducted at Source (TDS) returns submitted by employers or records reflected in AIS, authorities may seek clarification from taxpayers.
Such differences may arise due to omission of certain salary components, incorrect reporting or errors during return filing.
Officials generally examine such discrepancies to determine whether there has been any under-reporting of taxable income.
Undisclosed interest income can create issues
Interest income is another area where taxpayers often face mismatches.
Income earned from savings accounts, fixed deposits (FDs), recurring deposits (RDs) and income tax refunds is commonly reported by banks and financial institutions and reflected in AIS records.
Experts note that failure to disclose such income, or partial disclosure while filing returns, can create inconsistencies between the return and available tax records.
Such discrepancies may subsequently result in notices seeking explanations.
Incorrect TDS or TCS claims may affect refunds
Taxpayers have also been cautioned regarding claims related to Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).
Experts indicate that claiming tax credits exceeding amounts reflected in Form 26AS or AIS can create reconciliation issues.
In such situations, refund claims may be adjusted or authorities may seek additional clarification from taxpayers regarding the difference.
Careful verification of tax credit details before filing returns is considered essential to avoid such complications.
High-value transactions under department scrutiny
High-value financial transactions reported through various channels are also closely monitored by tax authorities.
Such transactions may include large investments in mutual funds, purchase or sale of immovable property, major credit card payments, foreign remittances and transactions involving securities.
If these transactions appear in AIS records but do not correspond with declared sources of income in tax returns, they may attract scrutiny.
Tax professionals advise taxpayers to ensure that income declarations and financial transactions remain consistent.
Capital gains reporting errors may trigger notices
Errors relating to capital gains have also emerged as a common issue among taxpayers.
Sales of shares, mutual funds, properties and other capital assets are often reported through intermediaries and reflected in AIS.
However, incorrect calculations or failure to disclose capital gains while filing returns may result in inquiries from tax authorities.
Experts recommend careful calculation of gains and applicable taxes before submitting ITR forms.
Understanding the Annual Information Statement
The Annual Information Statement (AIS) serves as an important document that provides comprehensive financial information relating to a taxpayer for a specific financial year.
It includes details regarding income, financial transactions and tax-related information available with the Income Tax Department.
Taxpayers can access AIS details by logging into their income tax e-filing accounts and may also submit responses or clarifications if required.
Experts advise taxpayers to reconcile information across Form 16, Form 26AS and AIS before filing returns to minimise the possibility of notices and ensure smooth processing.