Form 26AS, AIS and Books: Reconcile Before Filing Your ITR

Before filing an income-tax return (ITR), compare your books with Form 26AS and the Annual Information Statement (AIS). The purpose is not to make all three totals look identical. It is to understand why they differ, verify what is taxable, and make sure that the correct tax credit is claimed in the correct year.

A difference can be routine. It can also point to an unrecorded receipt, an incorrect report by a deductor, a duplicate AIS entry or a TDS credit that needs further review. A document-level reconciliation separates these possibilities.

This article covers returns for financial year (FY) 2025-26, which is assessment year (AY) 2026-27. They are still governed by the Income-tax Act, 1961 and the Income-tax Rules, 1962. From tax year 2026-27, the Income-tax Act, 2025 and the Income-tax Rules, 2026 apply, with renumbered provisions and forms. The reconciliation discipline is the same; the references will change.

Start by recognising the three different bases

The three records do not always measure income on the same basis.

Your books usually record income by the accounting method the business follows. Form 26AS reflects tax deducted and reported by deductors. For professional fees under Section 194J, deduction is generally linked to the time of credit or payment, whichever is earlier. AIS is broader: it reflects information reported by deductors, banks, financial institutions and other reporting entities, across several information categories.

This creates ordinary timing differences. A March invoice may appear in the books even though the client credits, pays and reports TDS in the next financial year. Equally, a payment received during the year may produce a Form 26AS entry for income the books recorded in an earlier year.

Do not force these records into one total without first identifying the basis and period of each entry.

Keep four records together

For the relevant financial year, keep:

• Ledger and income schedules from the books
• Form 26AS
• AIS and Taxpayer Information Summary (TIS)
• A reconciliation working sheet with source documents

At document level, the working sheet should capture:

• Client or reporting entity name and PAN (Permanent Account Number), where available
• Invoice or receipt reference and date
• Taxable value and GST, if any
• Date of income recognition in the books
• Date of credit or payment
• TDS amount and Form 26AS reference
• AIS information category and reported value
• Difference reason, action owner and closure status

A fictional example: books to Form 26AS

Assume a consulting practice has professional income of ₹24,00,000 in its books for the year.

The net difference is ₹1,50,000. The three items behind it total ₹2,30,000 in absolute terms, and each calls for a different response.

The ₹1,20,000 is a timing difference: the income belongs to this year, and the TDS will appear in next year's annual information statement (Form 168 from tax year 2026-27). The ₹40,000 is the reverse: income already offered last year, with TDS appearing now. The ₹70,000 needs follow-up: a client who did not deduct, did not report, or reported late. If tax was deducted but does not appear in Form 26AS, obtain the deductor's confirmation and follow up for correction of the TDS statement.

None of these items, on its own, means income is missing from the return.

A separate reconciliation: Form 26AS to AIS

For professional fees, much of the AIS information comes from the same TDS statements that feed Form 26AS. Differences between AIS and the books therefore usually arise from other information categories, and are best reconciled starting from the TDS-reported figure.

The AIS entries total ₹24,80,000, which is ₹80,000 more than the books. That net figure hides ₹2,30,000 of entries that appear only in AIS, offset by the ₹1,50,000 difference explained above. Of the ₹2,30,000, only the ₹25,000 of savings bank interest, which was never entered in the books, is income to be offered. The ₹1,20,000 is a duplicate (a different receipt from the March invoices in the first table) and the ₹85,000 belongs to another year. Treating the full ₹80,000 as additional income would overstate the return; ignoring it would miss the interest.

Reported values also need checking. The agreement or contract may show GST separately from the value of services. In that case, Circular No. 23/2017 dated 19 July 2017 of the CBDT (Central Board of Direct Taxes) clarifies that TDS is generally deducted on the amount excluding GST. Information flowing into AIS from other reporting streams may use a different value. Separate the taxable value and GST component before treating any AIS difference as income.

Use AIS feedback where the information needs correction

AIS is not only a viewing statement. The portal provides a feedback facility against individual information entries.

After checking the underlying documents, submit feedback against an AIS item where appropriate. The available options can include:

• Information is correct
• Information is not fully correct
• Information relates to other PAN/year
• Information is duplicate
• Information is denied

In the example above, the ₹1,20,000 entry calls for “Information is duplicate” and the ₹85,000 entry for “Information relates to other PAN/year”. Select the option that matches the facts, enter the corrected information or explanation where the portal requests it, and retain a copy of the submission with the supporting documents. Review the resulting status and its effect on TIS before finalising the return.

Feedback does not replace a correction by the reporting entity where one is required. If the issue is a TDS reporting error, follow up with the deductor as well.

Check the year in which TDS credit is claimed

Tax credit is not simply a cash-receipt exercise.

Rule 37BA provides that credit for TDS is to be given for the assessment year for which the related income is assessable. It also provides for credit to be given to another person where the income is assessable in that person's hands in specified circumstances.

The ₹40,000 row in the first table is exactly this situation: TDS appears in this year's Form 26AS, but the income was offered in the previous year. A credit should be matched to the year in which the related income is offered, subject to the applicable law and facts. Review the TDS entry, invoice date and payment date together, and do not claim or carry forward a credit only because it appears in one statement.

From tax year 2026-27: the same reconciliation, new references

The Income-tax Act, 2025 came into force on 1 April 2026, and the first tax year under it is 2026-27 (1 April 2026 to 31 March 2027). Returns for FY 2025-26 are still filed for AY 2026-27 under the 1961 Act and Rules. From tax year 2026-27, the steps in this article stay the same, but the statements, sections and rules have new numbers.

For payments that straddle the change, the Income Tax Department's transition FAQs look at the credit or payment, whichever is earlier. Where it happened before 1 April 2026, the 1961 Act applies. Where it happened on or after that date, the 2025 Act applies. A March 2026 invoice credited in March and paid in April is therefore dealt with under the 1961 Act, even though the TDS may be reported later.

In practice, keep a column in your working sheet for the governing Act of each entry. If not already done, update the section codes in your accounting and TDS software, and check that the quarterly statements for tax year 2026-27 use the new sections.

A practical review sequence

• Confirm which Act and rules govern the year being filed.
• Freeze the income schedule from the books.
• Match Form 26AS entries to client-wise income and TDS records.
• Separate timing differences from clients that did not deduct or report.
• Identify Form 26AS credits that relate to income of another year.
• Review every AIS entry not already explained by the books or Form 26AS.
• Separate taxable value and GST where relevant.
• Submit AIS feedback for incorrect, duplicate or unrelated information.
• Follow up with deductors for TDS-statement corrections where needed.
• Review the year of assessability and TDS credit under Rule 37BA.
• Keep the reconciliation, feedback acknowledgements and source records with the return working papers.

A well-prepared reconciliation gives the business a cleaner income trail, supports tax-credit claims and highlights client reporting issues before they become difficult to resolve.

Before relying on this article: the examples are original and use fictional data; they are not a client case study. The amounts show the direction and method of the reconciliation only. Income recognition, TDS credit, GST treatment, AIS feedback and return reporting must be checked against the current law, portal guidance and your own documents.

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