Income Tax 2025

Appearance

Annual information statement. ​

510(1) ​

The prescribed income-tax authority or the person authorised by such authority, shall upload in the registered account of the assessee an annual information statement in such form and manner, within such time and along with such information, which is in the possession of an income-tax authority, as prescribed.

510(2) ​

In sub-section (1), “registered account” means the electronic filing account registered by the assessee in the web portal, as may be designated by the prescribed income-tax authority or the person authorised by such authority.

Explanation

Section Summary: ​

Section 510 of the new income tax law introduces the concept of an Annual Information Statement (AIS). This statement will be uploaded by the income-tax authority (or an authorized person) to the taxpayer's registered electronic filing account. The AIS will contain information about the taxpayer that is already available with the income-tax authorities. The purpose of this section is to provide taxpayers with a consolidated view of their financial information, making it easier to file accurate tax returns and ensure compliance.

Key Changes: ​

  1. Introduction of AIS: This is a new provision that formalizes the process of providing taxpayers with a consolidated statement of their financial information.
  2. Electronic Delivery: The AIS will be uploaded to the taxpayer's registered electronic filing account, replacing or supplementing traditional paper-based communication.
  3. Centralized Information: The AIS will include all relevant financial information already available with the tax authorities, such as income from salaries, interest, dividends, and other sources.

Practical Implications: ​

  1. For Taxpayers:

    • Taxpayers will have access to a comprehensive summary of their financial information, which can help in preparing accurate tax returns.
    • It reduces the chances of errors or omissions in tax filings, as the AIS will serve as a reference point.
    • Taxpayers must ensure their registered electronic filing account is active and updated to receive the AIS.

  2. For Businesses:

    • Businesses may need to align their reporting systems with the AIS to ensure consistency between their records and the information provided by the tax authorities.
    • It may also reduce the burden of manual data entry during tax filing.

  3. For Compliance:

    • The AIS will likely streamline the tax filing process, as taxpayers can cross-verify their records with the information provided by the tax authorities.
    • It may also lead to increased scrutiny, as discrepancies between the AIS and the taxpayer's filings could trigger audits or notices.

Critical Concepts: ​

  1. Registered Account: This refers to the taxpayer's electronic filing account on the designated web portal (e.g., the Income Tax Department's e-filing portal). It is the official channel through which the AIS will be delivered.
  2. Prescribed Authority: The income-tax authority or authorized person responsible for uploading the AIS. The specific authority or process will be defined in the rules or notifications issued under this section.
  3. Information in Possession: The AIS will include data already available with the tax authorities, such as TDS (Tax Deducted at Source), TCS (Tax Collected at Source), and other financial transactions reported by third parties.

Compliance Steps: ​

  1. Ensure Registration: Taxpayers must ensure they have a registered electronic filing account on the designated web portal.
  2. Review AIS: Once the AIS is uploaded, taxpayers should review it carefully to ensure all information is accurate and matches their records.
  3. Rectify Discrepancies: If there are any discrepancies between the AIS and the taxpayer's records, they should take steps to correct them, such as contacting the relevant authority or updating their tax filings.
  4. Use AIS for Filing: The AIS can be used as a reference while preparing and filing income tax returns to ensure accuracy and compliance.

Examples: ​

  1. Scenario 1: A taxpayer receives their AIS and notices that the interest income from their savings account is missing. They can cross-check with their bank statements and, if necessary, report the discrepancy to the tax authorities or include the missing income in their tax return.

  2. Scenario 2: A business owner receives their AIS and finds that the TDS deducted by their clients is not reflected accurately. They can use the AIS to identify the discrepancy and ensure their tax return matches the information provided by the tax authorities.

This section aims to enhance transparency and simplify the tax filing process by providing taxpayers with a consolidated view of their financial information.