AIS mismatch causes chaos for taxpayers with stock market exposure

Time of India

a day ago

Ahmedabad: With the income-tax return (ITR) filing deadline fast approaching, chartered accountants and tax practitioners are raising alarm over widespread mismatches in the Annual Information Statement (AIS), particularly for individuals with stock market investments including mutual funds.
Several taxpayers have flagged discrepancies between actual stock market transactions and the data reflected in the AIS.
According to sources, a key concern is that in many instances, the AIS shows a purchase value of zero for listed securities. This significantly inflates the capital gains — and consequently the tax liability — for the taxpayer. The inconsistencies are attributed to the use of multiple data sources by the Income Tax Department, such as stock exchanges, mutual funds and depositories.
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Further complications arise in cases involving equities and equity-oriented mutual funds acquired prior to 31 Jan 2018 — the cut-off date for the grandfathering clause — which are also appearing in majority cases with a zero purchase value in the AIS as there is no source of auto-capturing the cost in cases where shares were received as gift or inheritance etc.
Karim Lakhani, a chartered accountant, said, "AIS has been a useful tool in recent years for retrieving transaction details at the time of filing returns.
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However, this year, the number of mismatches has been exceptionally high, making the process far more complex and time-consuming. Most salaried individuals now have stock market exposure, and this year, the AIS data related to such investments has been riddled with errors.
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"For instance, one of my clients' AIS shows dividend income of around Rs 1.5 lakh from a company in which he holds no shares. We've also faced difficulty in calculating short-term or long-term capital gains because the data provided by the client's broker often does not align with the AIS or the Taxpayer Information Summary (TIS).
In many stock market-related cases, the purchase value is recorded as zero, resulting in inflated tax liabilities.
We are forced to raise feedback within the return to get it corrected," Lakhani explained.
CA Jainik Vakil, chairman of the direct tax committee of the Gujarat Chamber of Commerce and Industry (GCCI) said, "Mutual funds entry is sometimes reflected twice in AIS because same transactions are reported twice-- one by registrar and one by depository."
Mukesh Patel, international tax expert said, "There are multiple data mismatch in AIS but fortunately, vigilante tax payers can compare their own data with AIS and correct it with feedback. It will help them in case of scrutiny."
A senior chartered accountant added, "Return filing has become far more complicated this year due to the existence of two slabs for short-term and long-term capital gains — one applicable before 23 July 2024, and another post that date.
We've also observed that in cases where shares were received as gifts, via succession, or acquired before 31 January 2018, the AIS lists the purchase cost as zero. The same issue applies in cases related to the grandfathering clause.
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Tax experts advise taxpayers with stock market exposure to cross-check AIS and TIS data carefully against their demat statements and broker reports before filing. Where discrepancies exist, raising timely feedback within the ITR portal is key to rectification.