Filing your Income Tax Return (ITR) for Assessment Year (AY) 2025-26 on the Income Tax Department’s e-filing portal has become more convenient with pre-filled data that pulls financial information directly from various sources. But even with this automation, Form 26AS and the Annual Information Statement (AIS) remain critical tools for ensuring accuracy and compliance. Wondering why these documents are still relevant? Let’s break it down.
What Are Form 26AS and AIS?
Form 26AS: Your Tax Credit Statement
Form 26AS is a consolidated statement issued by the Income Tax Department that details all tax-related transactions linked to your PAN during the financial year. It includes:
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Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).
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Advance tax or self-assessment tax paid.
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Tax refunds received.
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High-value transactions like property purchases or mutual fund investments.
If you’ve paid more tax than required, Form 26AS helps you verify these details to claim a tax refund through your ITR. If discrepancies arise, you can coordinate with the tax deductor to rectify them.
Annual Information Statement (AIS): A Comprehensive Overview
The AIS is an enhanced version of Form 26AS, offering a broader view of your financial transactions. It includes:
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Interest from savings accounts and fixed deposits.
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Dividend income.
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Mutual fund purchases and redemptions.
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Share transactions.
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Rent details.
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Foreign remittances under the Liberalised Remittance Scheme (LRS).
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Credit card payments and property transactions.
The AIS ensures you have a complete record of all taxable transactions. If you spot errors, you can submit feedback directly through the e-filing portal.
Why Do Form 26AS and AIS Matter?
Even with pre-filled ITR data, Form 26AS and AIS are essential for the following reasons:
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Cross-Verification for Accuracy: The Income Tax Department sources data from banks, employers, and other entities, but errors can occur. Cross-checking with Form 26AS and AIS ensures your income, TDS, and other financial details are correctly reflected, reducing the risk of tax notices.
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Comprehensive Disclosure: AIS captures a wider range of transactions, helping you report all taxable income accurately. Missing or incorrect data could lead to underreporting, triggering scrutiny from the tax department.
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Claiming Refunds: Form 26AS is crucial for verifying taxes paid. If you’re eligible for a refund, this document ensures you claim the correct amount.
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Avoiding Penalties: Accurate ITR filing, backed by Form 26AS and AIS, helps you comply with tax laws and avoid penalties for non-disclosure or incorrect reporting.
How to Use Form 26AS and AIS for ITR Filing (AY 2025-26)
Before filing your ITR for AY 2025-26 (due by July 31, 2025, for non-audit cases), follow these steps:
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Download Form 26AS and AIS: Access these documents via the e-filing portal under the “e-File” section.
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Cross-Check Data: Compare the pre-filled ITR data with Form 26AS and AIS to verify income, TDS, interest, and other transactions.
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Report Discrepancies: If you find errors in Form 26AS, contact the tax deductor. For AIS inaccuracies, submit feedback on the portal.
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Ensure Full Disclosure: Use AIS to confirm all taxable transactions, such as dividend income or capital gains, are included in your ITR.
Leveraging Capital Gains Against Basic Exemption Limits
For AY 2025-26, taxpayers can optimize their tax liability by adjusting Short-Term Capital Gains (STCG) under Section 111A and Long-Term Capital Gains (LTCG) under Section 112A against the basic exemption limit, regardless of whether they opt for the old tax regime or the new tax regime (Section 115BAC).
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Old Tax Regime: The basic exemption limit is ₹2.5 lakh (₹3 lakh for senior citizens, ₹5 lakh for super senior citizens).
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New Tax Regime: The limit is ₹3 lakh for AY 2025-26, increasing to ₹4 lakh from AY 2026-27 per the Finance Act, 2025.
If your total income (excluding STCG, LTCG, and casual income) is below the basic exemption limit, you can offset the shortfall against these gains. Practically, adjust STCG (taxed at 20% under Section 111A) before LTCG (taxed at 12.5% under Section 112A with a ₹1.25 lakh annual exemption) to minimize your tax liability.
Why This Matters for Taxpayers
Form 26AS and AIS are your safety nets for ensuring a seamless and accurate ITR filing process. By verifying pre-filled data, you can avoid costly mistakes, claim rightful refunds, and stay compliant with tax laws. Additionally, understanding how to adjust capital gains against the basic exemption limit can help you optimize your tax strategy, whether you’re in the old or new tax regime.
Looking Ahead
As the ITR filing deadline for AY 2025-26 approaches on July 31, 2025, ensure you download and review your Form 26AS and AIS early. The Income Tax Department is yet to update e-filing utilities for AY 2025-26, so stay vigilant for announcements. By leveraging these documents and understanding tax provisions like STCG and LTCG adjustments, you can file your ITR confidently and avoid future complications.
