Income Tax Return Filing: How new AIS correction status update feature will help taxpayers - explained

Income Tax Return e-filing: Taxpayers facing inaccuracies in their Annual Information Statement (AIS) now have a solution at hand. The Central Board of Direct Taxes (CBDT) has revamped the AIS system, enabling individuals to track the status of their correction requests in real-time.
The CBDT announced in a press release dated May 13, 2024, that they've added a new feature to the AIS.This feature will show if the taxpayer's feedback has been addressed by the source, either partially or fully, by accepting or rejecting it.

As per an ET report, the AIS can be found on the compliance portal, which is accessible to all registered income taxpayers. You can't access the compliance portal directly. First, you need to log in to the e-filing ITR portal, then go to the 'Pending Actions' tab to access the compliance portal.
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CBDT stated in its press release that the Annual Information Statement is accessible to all registered Income Taxpayers via the compliance portal, which can be reached through the e-filing website (incometax.gov.in).

According to the CBDT's press release, if the feedback is partially or fully accepted, the source needs to correct the information by filing a correction statement.
The AIS will display the following details regarding feedback confirmation from the source:
- Confirmation Status: Indicates if feedback has been shared with the reporting source.
- Date of Feedback Sharing: Shows when feedback was sent to the reporting source.
- Date of Source Response: Displays when the reporting source responded to the feedback.
- Source Response: Indicates the response provided by the source based on the taxpayer's feedback (whether correction is needed or not).
CBDT mentioned in the press release that this new feature is anticipated to enhance transparency by showing such information in AIS to the taxpayer.

If there's incorrect AIS data, you need to give feedback for correction. But in the past, there have been issues when the reporting source didn't act promptly to fix this. As a result, taxpayers got income tax intimation notices because of discrepancies between AIS and ITR data.
Mihir Tanna, an associate director-direct tax at S.K Patodia LLP, a CA firm, states that they have observed how incorrect information in AIS has caused distress to numerous legitimate taxpayers upon receiving intimation from the income tax department regarding data mismatches between AIS and filed ITR. In the past, some of their clients encountered issues where sale and purchase transactions of shares appeared in AIS, despite not being conducted by them. They provided feedback in the AIS tab but were uncertain if the reporting entity took necessary action.
This new feature will make it clear if you need to do anything more after providing feedback on wrong AIS information. According to Tanna, if the reporting source doesn't accept the feedback, then the taxpayer only needs to take necessary action. This clarity and transparency are provided by the new functionality.
Experts note that the CBDT's press release doesn't specify how the taxpayer will be informed about the feedback provided by the reporting source.
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Divya Jokhakar, a CA and Associate of the Association of Chartered Certified Accountants (ACCA) in the United Kingdom (UK), explains that the new feature will now notify the taxpayer after they provide feedback on incorrect AIS data, including the date when the reporting source is informed and confirmation is sent. Similarly, the taxpayer will also be notified about the response and its date from the source. The press release doesn't mention how this communication will happen, but it's likely to be through SMS to the registered mobile number and email to the registered email ID.
Experts also mention that the communication between the taxpayer and reporting source becomes simpler. According to Jokhakar, this change means that communication is no longer one-sided as it was before. This should provide taxpayers with some relief, knowing that their feedback is being addressed. Additionally, they can interact with sources like tax deductors, collectors, and SFT filers more easily.

The AIS gathers financial data from various sources known as reporting entities. This data offers a snapshot of the taxpayer's financial transactions, forming the basis for filing income tax returns. Yet, since this information comes from third-party reports, there's a possibility of errors entering the AIS database due to reporting mistakes.
To address this issue, CBDT implemented a feedback system within AIS.
CBDT stated in the press release that within AIS, taxpayers can now give feedback on each displayed transaction. This feedback allows taxpayers to comment on the accuracy of the information provided by the source. If there's incorrect reporting, the system automatically follows up with the source for confirmation. Currently, this confirmation process is operational for information provided by Tax Deductors/Collectors and Reporting Entities.
With the recent update, the feedback system has become more responsive, giving taxpayers the ability to take corrective actions and track the status of correction requests.