₹4,21,640.
That's the demand notice a senior product manager in HSR Layout opened on a Tuesday morning in March 2026 — an AIS TIS mismatch in his ITR had flagged ₹14.2 lakh of "undisclosed income" against his FY 2024-25 return. Dividend, mutual fund redemption gain, and RSU vesting value he'd never seen in his bank account in the form the AIS showed it.
He paid. Then three of his ex-colleagues at the same company got the same notice within ten days.
None of them had under-reported anything on purpose. All four had filed their ITR off their Form 16 and broker statements. What they hadn't done was open the Annual Information Statement on the income tax portal and reconcile it line by line — against the TIS — before pressing submit.
You think your tax filing is sorted because your CA filed on time and the refund came through. The Income Tax department's AIS has been quietly building a parallel ledger on you, and from FY 2024-25 onwards, that ledger is what they assess your return against.
AIS Is Not a Helpful Tool. It's an Evidence File.
When the Annual Information Statement was rolled out in November 2021, it looked like a convenience — a pre-filled summary of your interest, dividends, and high-value transactions to make ITR filing easier.
That framing has aged badly.
The AIS, by CBDT design, now pulls data from 47 reporting sources — every bank, every mutual fund AMC, every broker, every registrar, every property registrar, every credit card company that issues over ₹10L on a single card in a year, every foreign remittance under LRS, every RSU vesting from a listed parent, every cash deposit over ₹10L, every property purchase over ₹30L. It is the most complete picture of your financial life that exists outside your own bank login.
If the number in your ITR is lower than the number in your AIS, the Centralised Processing Center's automated reconciliation engine flags it. You get a notice under Section 143(1)(a) within 9-12 months. By then the late-filing window has closed.
This is not a discretionary review. It is a software match.
The 6 Categories Where ₹15L+ Earners Get Hit
Most salaried earners with one bank, one broker, and one employer never see a mismatch. The story changes the moment your financial life has more than one moving part. Six categories generate roughly 80% of the notices we see at MyFinancial diagnostics.
1. RSU and ESOP vesting. Indian tech employees of US-listed parents (Google, Microsoft, Amazon, Meta, Salesforce, Adobe) have their RSU vesting reported through the employer's payroll AND separately reported by the global custodian via Form 60 cross-border data sharing. If you sold any shares in the same FY, the broker (E*TRADE, Fidelity, Morgan Stanley) reports the sale value too. You see one number on your Form 16 perquisite. The AIS sees three.
2. Mutual fund redemptions. Every time you redeem from a SIP, the AMC reports the gross redemption value to AIS, not the capital gain. If you redeemed ₹18 lakh of a flexi-cap that you'd put in ₹14 lakh of principal, your ₹4 lakh LTCG is what you owe tax on. But AIS shows ₹18 lakh. The matching engine doesn't subtract cost basis — that's your job.
3. Dividend income on equities. The Finance Act 2020 moved dividends from DDT (paid by the company) to recipient-taxed. Every dividend over ₹5,000 in a year per company gets 10% TDS. If you held any high-yield equity through the year — banking, FMCG, PSU oil & gas, asset management — the dividend shows on AIS even if you let it sit in your demat as cash.
4. Interest income beyond the SB account. AIS pulls interest data from every PAN-linked deposit — your Bajaj Finance corporate FD, your post office MIS, your RBI Floating Rate Savings Bond, your NSC, your tax-free bond. The 26AS only shows what had TDS deducted. AIS shows everything.
5. High-value transactions. Cash deposits over ₹10L cumulative, foreign remittances under LRS over ₹7L (now flagged at ₹7L per FY for TCS), credit card spends over ₹10L on a single card, sale of property over ₹30L, purchase of mutual funds over ₹10L from a single AMC in a year — all reported via SFT.
6. Foreign income and assets. From FY 2024-25, Schedule FA reporting is being cross-matched against CRS data shared by 100+ countries. If you have a US brokerage account, a UK ISA, a Dubai bank account, a Singapore CPF — AIS may or may not show it, but the assessment officer can pull it.
The ₹4.2 Lakh Case, Reconciled
Back to the HSR Layout product manager. He earns ₹42 lakh CTC at an Indian subsidiary of a Nasdaq-listed company. His March 2026 notice broke down like this.
Item 1 — RSU "double counting": ₹8.6 lakh added. His Form 16 already taxed ₹8.6 lakh of RSU vesting as perquisite. But his AIS also showed ₹8.6 lakh as "transfer of capital asset" because the Indian custodian reported the same vest as a stock transfer event. The notice presumed it was a second income.
Item 2 — MF redemption gross-up: ₹3.1 lakh added. He'd redeemed ₹12 lakh from a small-cap fund to fund his car downpayment. His actual LTCG (after ₹8.9 lakh cost) was ₹3.1 lakh, which he'd disclosed correctly. But the AIS showed the gross ₹12 lakh, and the matching engine flagged the ₹8.9 lakh "gap" as unreported.
Item 3 — Dividend reinvested: ₹54,000 added. He'd never redeemed a paise of the ₹54,000 dividend his stock portfolio threw off — it sat in his demat as cash. AIS reported it; his ITR didn't.
Item 4 — FD interest from a fintech app: ₹1.9 lakh added. He'd parked emergency cash in a Bajaj Finance corporate FD via a fintech app, earned ₹1.9 lakh interest, and the fintech had deducted no TDS (under ₹5,000 quarterly slice per account). 26AS showed nothing. AIS showed everything.
Total flagged: ₹14.2 lakh. Tax + interest + late-correction penalty: ₹4,21,640.
He paid. He could have submitted AIS feedback for Items 1 and 2 — both were duplicates or wrong cost basis — and the demand would have dropped by roughly ₹2.4 lakh. He didn't know the feedback button existed.
The AIS-TIS Reconciliation Playbook Before You File Your ITR
Before you file your FY 2025-26 ITR — or amend the one you've already filed — run this sequence.
Pull all three statements. Log in to incometax.gov.in. Open AIS (under Services → AIS). Download the AIS PDF, the TIS (Taxpayer Information Summary — the compressed view), and the Form 26AS. You need all three. They're not the same document.
Reconcile from the AIS side, not the ITR side. Most CAs work bottom-up from your bank statement and broker statement. The matching engine works top-down from AIS. Start with what AIS knows about you, then prove each line against your own records.
Submit feedback on every wrong line. AIS has a feedback button next to each entry. The options are: Information is correct / Information is not fully correct / Information relates to other PAN-Year / Information is duplicate / Information is denied. Use them. If you don't, AIS treats the entry as accepted. Feedback that is auto-accepted updates your TIS within 24 hours and reduces the matching engine's confidence flag.
Capture the cost basis separately. AIS gives you gross numbers. Build a parallel spreadsheet with cost basis for every MF redemption, every stock sale, every property sale. The deduction belongs in your ITR, not on AIS.
Compare TIS to your Schedule SI and Schedule CG. TIS is the compressed view the assessing officer reads first. Every number on the TIS must reconcile to a corresponding line on your ITR. If TIS shows ₹3.2 lakh of dividend and your Schedule OS shows ₹2.8 lakh, that ₹40,000 gap is your notice.
5 Mistakes That Trigger the Notice
Mistake 1 — Treating AIS as gospel. Cost: average ₹1.2-2.4 lakh per incident. AIS is wrong roughly 12-18% of the time in our diagnostic review — duplicates, mis-tagged PAN, cost basis missing, RSU double-counts. If you accept it without reading, you over-pay or get notices for under-reporting. Either way you lose.
Mistake 2 — Filing without downloading AIS first. Cost: ₹50,000-₹5 lakh demand notice. The number of high earners who file off Form 16 and broker statements alone, and never log in to AIS, is the single biggest source of post-filing demand notices.
Mistake 3 — Ignoring "feedback pending" status. Cost: ₹40,000-₹1.5 lakh in interest under Section 234B/C. If you submit feedback in March against an entry, the AIS updates but your TIS may still reflect the old number until the assessing officer accepts it. File too fast and the mismatch flag fires anyway.
Mistake 4 — Missing the RSU double-report. Cost: 30% on the perquisite value, again. Indian subsidiaries of US-listed companies report RSU vesting twice — once via the employer's TDS, once via the global custodian. Both flow into AIS as separate entries. You only owe tax once. The feedback button fixes it; not using it costs you the full slab rate again.
Mistake 5 — Not reconciling the FD interest from fintech apps. Cost: ₹15,000-₹1.5 lakh in undisclosed interest. Corporate FDs through Jupiter, INDmoney, Smallcase, Niyo and similar platforms often slice deposits below the TDS threshold per quarter. 26AS won't show the interest. AIS will. Your ITR must too.
What To Do This Filing Season
The ITR-2 and ITR-3 deadline for FY 2025-26 is 31 July 2026 (or 31 October 2026 for those requiring audit). Three weeks before you file, run the reconciliation.
Log in. Download AIS, TIS, 26AS. Build a single spreadsheet with three columns: AIS number / your record / variance. For every variance, decide: file feedback, or correct your ITR draft.
If you find a duplicate, mis-tagged, or wrong-PAN entry, submit AIS feedback first and wait for the TIS to update. Only then file your ITR.
If you find an entry in AIS you genuinely didn't know about — an old FD that auto-renewed, dividends from a stock you forgot about, interest from a parent's joint FD where you're the first holder — add it to your ITR. Forgetting is not a defence under Section 143.
If you've already filed and the variance is significant, file a revised return (ITR-U) before 31 December 2026 to avoid the notice cycle entirely.
This is not optional anymore. From AY 2025-26, AIS is the default reconciliation base, and the assessment is automated. You either match it before filing, or you defend it after.
FAQ
What happens if AIS and ITR don't match? The CPC's automated reconciliation engine flags the variance during return processing. If the variance exceeds ₹50,000 or 10% of declared income (whichever is lower), you get a Section 143(1)(a) intimation requesting clarification. If you don't respond in 30 days, the higher AIS number is added back to your taxable income.
How do I correct mismatches in AIS? Use the feedback mechanism on the AIS portal. Open the specific entry, click Submit Feedback, choose the right reason (duplicate / wrong PAN / wrong amount / denied), and add a comment. Your TIS updates in 24-72 hours. The original AIS entry isn't deleted — your feedback is appended, and the assessing officer sees both.
Is AIS data final for ITR filing? No. AIS is the department's view; your ITR is your declaration. If your records and AIS disagree, your job is to submit feedback and file accurately. The final source of truth in an assessment is the underlying transaction record (bank statement, broker statement, registry deed), not AIS itself.
What's the difference between AIS, TIS, and Form 26AS? Form 26AS shows only entries where TDS was deducted. TIS is the compressed, deduplicated summary the assessing officer reads. AIS is the full ledger — every reported transaction across 47 sources, with or without TDS. From FY 2024-25 onwards, the assessment engine reads TIS first, AIS for detail, and 26AS only for TDS credit matching.
Will I get a notice if AIS doesn't match my ITR? Almost certainly, if the gap is over ₹50,000. The match is software-driven and runs on every processed return. The notice arrives 6-12 months later, by which time interest under 234B and 234C has accrued.
Most professionals have at least one blind spot like this.
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This post is published by MyFinancial for educational purposes only and does not constitute investment, tax, or insurance advice. All numbers are illustrative. Consult a qualified financial advisor before making financial decisions.
