Pooja Nair (an illustrative profile), 33, a software engineer in Bengaluru, received a tax notice last year. Her return showed salary and FD interest, but her Annual Information Statement also showed mutual fund redemptions of ₹4 lakh and dividends on US shares from her employer's stock plan. She had not reported either, because "the gain was small" and "it was in dollars".
Filing a return is where all your investment decisions meet the tax department's records. The department now sees much of what you do. A careful return avoids notices, claims every refund and protects losses for future years.
In this chapter
- What the AIS and TIS show, and how to reconcile them
- Which ITR form fits which investor
- Reporting foreign assets in Schedule FA
- Correcting mistakes, and which records to keep
Start with the AIS and TIS
The Annual Information Statement (AIS) on the e-filing portal lists what banks, fund houses, companies, registrars, property registrars and others have reported about you: interest, dividends, sales of shares and funds, property deals, foreign remittances and TDS. The Taxpayer Information Summary (TIS) condenses it by category, and your annual tax credit statement (long known as Form 26AS) shows tax deducted and paid against your PAN.
Think of the AIS as the department's copy of your bank passbook. If your return does not match it, the system flags the difference automatically, which is how most routine notices begin.
Worked example: reconciling Pooja's AIS
Inputs, illustrative: the AIS shows savings interest of ₹8,400 and FD interest of ₹54,000 from Bank A, the same ₹54,000 again under a second branch code, mutual fund redemptions of ₹4 lakh, and dividends on foreign shares. Pooja's own statements show FD interest of ₹54,000, and a fund statement showing cost of ₹3.1 lakh for the redeemed units, all held over 12 months.
- Download the AIS and TIS, and your fund capital gains statement and bank interest certificates.
- Match interest: ₹8,400 + ₹54,000 = ₹62,400 is genuine. The duplicate ₹54,000 is reported twice; submit feedback on the portal marking it as duplicate.
- Work out the fund gain: ₹4 lakh sale value − ₹3.1 lakh cost = ₹90,000 long-term gain, within the ₹1.25 lakh exemption, so no tax. It must still be reported.
- Report the foreign dividends as income at slab rate, converted to rupees, and claim credit for any foreign tax withheld under the rules.
- Report the shares in Schedule FA (see below), which also means ITR-2 rather than ITR-1.
Which ITR form
| Form | Broadly for | Investor notes |
|---|---|---|
| ITR-1 | Resident individuals with income up to ₹50 lakh from salary, one house property and other sources | Allows equity LTCG up to ₹1.25 lakh; no other capital gains, no foreign assets |
| ITR-2 | Individuals and HUFs without business income | Needed for most capital gains, more than one house, foreign assets or foreign income |
| ITR-3 | Individuals and HUFs with business or professional income | Also for F&O and intraday trading income |
| ITR-4 | Presumptive business or professional income | Limited capital gains reporting |
Schedule FA: foreign assets
If you are resident and ordinarily resident, you must report foreign assets in Schedule FA: overseas bank accounts, US shares bought under the Liberalised Remittance Scheme, foreign employer RSUs or ESOPs, foreign mutual funds and property abroad. This applies even if the asset earned nothing during the year. The reporting period for Schedule FA follows the calendar year (January to December), not the financial year, which catches many people out.
Non-disclosure can attract heavy penalties under the Black Money Act, separate from any tax. Our guide to Schedule FA explains each table, and LRS and TCS covers the remittance side.
Due dates and corrections
File by the due date notified for your category, which for most individuals without an audit has been 31 July. Filing on time keeps your right to carry forward capital losses and avoids late fees and interest.
| Type of return | When to use it | Cost |
|---|---|---|
| Original return | By the due date | None beyond tax due |
| Revised return | To correct a mistake within the permitted time after filing | No extra tax beyond the correct amount and interest |
| Belated return | After the due date, within the permitted window | Late fee; capital losses cannot be carried forward |
| Updated return | To report missed income for up to four years after the tax year | Additional tax of 25% to 70% of tax and interest, rising with delay |
Keep the right records
The department can revisit past years within set time limits, and losses can be carried for eight. Your records are your defence.
- Purchase contract notes, fund statements, property deeds and improvement bills: as long as you hold the asset, plus several years after sale.
- Capital gains statements and AIS for each year: at least eight years, to cover carry-forward and reassessment windows.
- Proof of deductions (insurance, ELSS, rent, donations): several years after the return.
- Form 121 declarations and TDS certificates: several years after the return.
Common mistakes to avoid
- Filing without opening the AIS: mismatches trigger most automated notices.
- Skipping small exempt gains: exempt gains must still be reported in the return.
- Using ITR-1 with foreign assets or other capital gains: the return can be treated as defective.
- Reporting Schedule FA on a financial-year basis: it follows the calendar year.
- Ignoring a notice: responding on time with documents usually resolves it.
Try this yourself: Log in to the e-filing portal, download your AIS for last year, and tick off each entry against your own statements. Note anything you did not report, any duplicate, and any foreign asset. Create one digital folder per financial year for statements, AIS and the filed return.
Frequently asked questions
What should I do if my AIS shows wrong information?
Submit feedback on the e-filing portal against that entry, choosing options such as "information is duplicate" or "not mine". Then file your return on your correct figures and keep the supporting documents in case of questions.
Do I need to report exempt equity gains under ₹1.25 lakh?
Yes. Exempt income must still be shown in the return. ITR-1 allows equity LTCG within the exemption; larger or other gains generally need ITR-2.
How long should I keep my investment tax records?
Keep purchase records for as long as you hold the asset and for several years after you sell, because the cost and date decide the gain. Keep each year's AIS, capital gains statements and filed return for at least eight years, which covers the carry-forward window for losses.
Can I fix a mistake after filing?
You can file a revised return within the permitted time. After that, an updated return can be filed for up to four years after the tax year, with additional tax that increases the longer you wait.
If your situation involves property sales, foreign assets or NRI status, consider professional help: Money n Wealth offers tax consultation, and see also NRI taxation.
You have completed the module: You can now compare tax regimes with real numbers, apply the right capital gains rules, handle interest, dividends and TDS, use losses within the rules and file a return that matches the department's records. If you would like help applying this to your own portfolio, book a free review with the Money n Wealth team.
Ready to apply it? Book a free review.