Tax returns might need revision, stay on top of AIS updates say experts

In the aftermath of the tax return filing deadline, many taxpayers and chartered accountants are finding themselves caught up in a web of complexities due to the introduction of the Annual Information Statement (AIS) and the e-verification scheme.

Despite filing their returns by July 31, some taxpayers are realising that the game isn't over yet, as AIS updates continue to cause mismatches in data. To avoid delays in processing or refunds, experts recommend staying vigilant about AIS updates and promptly submitting feedback based on the validity of expenses or taxes mentioned.

The AIS, a dynamic form introduced since Budget 2022, has proven to be a challenge for both taxpayers and tax professionals. The information within the AIS keeps changing even after returns have been filed, leading to confusion and potential errors.

Data regarding shares, joint property transactions, and TDS often gets reported in duplicate or with wrong information. As financial services firms update their data based on their cycles, the AIS may reflect changes even after the initial filing.

Taxpayers have been troubled by the need to provide long-forgotten information, such as interest income in dormant bank accounts, leading to underreporting of income tax. To address these issues, professionals try to match information from bank statements with the AIS and file returns based on the higher of the two numbers to avoid complications.

The call for revised returns

Considering these challenges, tax experts advise taxpayers to file revised returns if any fresh and correct information emerges. 
"Even after revising returns, there may still be follow-up from the assessing officer if there are mismatches between reported income and AIS data. Additionally, the newly introduced e-verification scheme allows the income tax department to send notices to taxpayers to verify the accuracy of the information, which may result in further actions if discrepancies are found," said Amit Gupta, MD, SAG Infotech.

The e-verification game

The recently introduced e-verification scheme allows taxpayers to confirm or dispute the information collected about them. The income tax department sends notices to taxpayers to verify the accuracy of the information, particularly in cases where there are discrepancies between the data collected by the department and the numbers disclosed by the taxpayer in their return. Approximately 66,000 e-verification notices were sent out last year to address such issues.

"Apart from these challenges, taxpayers need to be cautious about potential fraud related to tax refunds. Fake links claiming to provide refunds have been circulating, and taxpayers are urged to verify senders and avoid ing on suspicious links to mitigate phishing risks," Gupta added.

All communication from tax authorities is available for viewing in the "pending actions" tab once users log in to the online tax portals.