AIS Reporting of Dividend Income – What to Do If It’s Incorrect

The Annual Information Statement (AIS) is rapidly becoming a cornerstone of the Indian tax system, offering taxpayers a consolidated view of their financial activities as reported to the Income Tax Department. However, while helpful, it’s not uncommon for taxpayers, including small business owners and salaried individuals, to encounter discrepancies. A frequent issue is finding incorrect dividend income in AIS. Since accurate reporting is vital for correct tax calculation and avoiding potential scrutiny, understanding the AIS reporting of dividend income and knowing how to handle errors is crucial. This guide will walk you through what AIS means for your dividend income, why accuracy matters, and the exact AIS dividend income correction process if you find mistakes.

What is the Annual Information Statement (AIS)?

Defining AIS

The Annual Information Statement (AIS) is essentially a detailed report card of your financial transactions for a specific financial year, compiled by the Income Tax Department. It goes beyond the information available in Form 26AS and aims to capture a wider range of financial activities reported by various entities. Think of it as a comprehensive overview designed to help you file an accurate income tax return. It includes details like salary, interest income, sale/purchase of securities, property transactions, and, importantly, dividend income. You can access your AIS through the official Income Tax e-filing portal. For more details directly from the source, you can visit the Income Tax India Website. The goal of AIS is to promote transparency and voluntary compliance by providing taxpayers with readily available information about their financial footprint.

How is Dividend Income Reported in AIS?

Dividend income finds its way into your AIS because the companies paying dividends, or their Registrar and Transfer Agents (RTAs), are obligated to report these payments. These entities file what’s known as a Statement of Financial Transactions (SFT) with the tax authorities, detailing the dividend amounts paid against specific Permanent Account Numbers (PANs). To understand the broader aspects of tax implications on such transactions, see our Understanding Capital Gains Tax in India. When a company declares and pays a dividend on shares you own, or a mutual fund distributes dividend income, they report this transaction linked to your PAN. The Income Tax Department then processes this SFT data and populates the ‘Dividend Income’ section under Part B (SFT Information) of your specific AIS. This ensures that the department has a record of the dividend income potentially received by you during the financial year, based on the information provided by the payer.

Why Accurate AIS Reporting of Dividend Income Matters

Ensuring the accuracy of the AIS reporting of dividend income reflected in your statement is not just about good record-keeping; it has direct implications for your tax obligations and potential interactions with the Income Tax Department. Ignoring discrepancies can lead to complications down the line.

Impact on Tax Liability Calculation

Since Budget 2020, dividend income is taxable in the hands of the shareholder or unitholder according to their applicable income tax slab rates. Previously, companies paid Dividend Distribution Tax (DDT), making it largely tax-free for recipients. Now, it’s part of your total taxable income. The AIS system often pre-fills data into your Income Tax Return (ITR) form. If the dividend income shown in AIS is inflated or incorrect, relying on this pre-filled data without verification can lead to an overstatement of your income and, consequently, a higher tax liability than you actually owe. For more new taxpayers, check out our Beginners’ Guide to Filing Income Tax Returns Online. Accurate dividend income tax reporting India hinges on starting with the correct figures, making AIS verification essential.

Avoiding Tax Notices and Scrutiny

The Income Tax Department uses sophisticated tools to compare the income you declare in your ITR with the information reported in your AIS and Form 26AS. Significant mismatches act as red flags. If you report dividend income lower than what appears in your AIS (and haven’t submitted corrective feedback), it could trigger automated communication or even detailed scrutiny from the department seeking clarification for the discrepancy. Proactively reconciling your actual dividend receipts with the AIS data *before* filing your ITR is the best way to ensure a smooth filing process and minimize the chances of receiving tax notices related to dividend income.

Penalties for Mismatch

Ignoring AIS reporting errors India or failing to report your true income can have financial consequences. If a discrepancy leads to the conclusion that you have underreported your income, the Income Tax Act provides for levy of interest on the tax shortfall (under sections 234B and 234C). Furthermore, penalties for underreporting income (under section 270A) could potentially be imposed, which can be substantial. While genuine mistakes during the initial phase of AIS implementation might be viewed leniently if corrected promptly, deliberate omission or negligence can attract these penal provisions. Therefore, verifying and rectifying AIS data is crucial risk management.

Common Reasons for Incorrect Dividend Income in AIS

Discovering incorrect dividend income in AIS can be perplexing. Several factors can lead to AIS data mismatch for dividends, and understanding these can help you identify the potential source of the error. Here are some common reasons:

• Timing Differences: This is a frequent culprit, especially for dividends declared or paid around the financial year-end (March 31st). A company might report the dividend based on its declaration date falling in one financial year, while you receive it or it gets credited to your account in the next financial year. This can lead to the income appearing in the AIS of the wrong assessment year compared to your records.
• Data Entry Errors by Reporting Entity: Mistakes can happen. The company, its RTA, or the financial institution reporting the dividend payment might make a clerical error while submitting the SFT data. This could involve typing the wrong amount, miskeying a date, or other inaccuracies during the bulk data submission process. These AIS reporting errors India originate at the source.
• Incorrect PAN Mapping: Sometimes, the dividend might be correctly paid but incorrectly linked to the wrong PAN during reporting. Conversely, a dividend belonging to someone else might mistakenly appear in your AIS if your PAN was erroneously quoted. Issues with joint accounts or minor operational glitches can also contribute to this.
• Duplicate Entries: Occasionally, the same dividend transaction might be reported more than once by the reporting entity or through different channels, leading to an inflated income figure in your AIS. This requires careful comparison with your bank statements to identify and report the duplication.
• Difference in Reporting Nature: For small business owners holding shares through their company structure, sometimes confusion arises if dividends meant for the company are wrongly reflected or if personal dividend reporting doesn’t align perfectly with corporate filings, though this is less common for typical individual dividend receipts.

How to Check Your Dividend Income in AIS

Verifying your dividend income in AIS is a straightforward process. Follow these steps:

1. Log in: Access the official Income Tax e-filing portal: Income Tax India Website. Use your PAN as the User ID and enter your password.
2. Navigate to Services: Once logged in, find the ‘Services’ tab on the top menu bar.
3. Select AIS: Under the ‘Services’ tab, click on ‘Annual Information Statement (AIS)’.
4. Proceed to Compliance Portal: A prompt will appear. Click ‘Proceed’. This will redirect you to the AIS Compliance Portal in a new tab or window.
5. Select Financial Year: On the AIS homepage, choose the relevant Financial Year (e.g., 2023-24 for Assessment Year 2024-25) for which you want to check the information.
6. Open AIS: You’ll see two main tiles: Taxpayer Information Summary (TIS) and Annual Information Statement (AIS). Click on the ‘AIS’ tile.
7. Find Dividend Income: Inside the AIS section, click on ‘Part B: SFT Information’. This section lists income reported by various entities based on Statement of Financial Transactions.
8. Locate Dividends: Scroll down or look for the information category labelled ‘Dividend Income’ (usually code SFT-015 or similar). Click on it.
9. Review Transactions: You will see a list of dividend transactions reported for your PAN. This typically includes the Name of the Reporting Entity (Company/Mutual Fund), the Amount of dividend reported, and often the date. Carefully compare these entries with your personal bank statements, demat account statements, or dividend warrants/advices to confirm accuracy.

Step-by-Step Guide: How to Rectify Incorrect AIS Dividend Data

If you find discrepancies after checking your AIS, the portal provides a mechanism to provide feedback. This is the official way to rectify incorrect AIS dividend data. Here’s how to approach the AIS dividend income correction process:

Accessing the Feedback Facility

Once you are viewing the specific dividend transactions within the AIS section (as described in the previous section), locate the particular entry that shows incorrect dividend income in AIS. For each transaction listed, you will usually find an ‘Optional’ button or link under a ‘Feedback’ column. Clicking this button next to the incorrect entry initiates the feedback process for that specific transaction. You need to provide feedback individually for each erroneous entry.

Submitting Feedback on Incorrect Information

After clicking the feedback button, a screen or dropdown menu will appear presenting several options to categorize your feedback. Choose the option that best describes the reason for the discrepancy. Common options include:

• Information is not correct: Use this if the amount, date, or other specific detail is wrong. You’ll typically need to provide the correct information.
• Information is not fully correct: Similar to the above, useful if part of the information is right, but some details (like the amount) are inaccurate.
• Information relates to other PAN/Year: Select this if the dividend belongs to someone else or pertains to a different financial year than the one being displayed.
• Information is duplicate / included in other information: Use this if the same dividend payment is listed multiple times within AIS.
• Information is denied: Choose this if you assert that you never received this dividend payment at all.
• Information is correct: Use this if, upon closer review, you find the AIS information was actually accurate.

Selecting the appropriate feedback type is the first step in what to do with incorrect AIS dividend entries.

Providing Remarks and Supporting Documents (If Applicable)

After selecting the feedback type (e.g., “Information is not correct”), a remarks box will usually appear. This is crucial. Clearly and concisely explain why the information is incorrect. For example: “The dividend received from ABC Ltd. on DD/MM/YYYY was Rs. 5,000 as per bank statement, not Rs. 15,000 as reported.” or “This dividend pertains to FY 2022-23, received in April 2022, but reported incorrectly in FY 2023-24 AIS.” Brevity and clarity are key.

Some feedback types might allow you to upload supporting documents directly through the portal (check current functionality). If available, uploading a masked bank statement highlighting the correct credit, a dividend voucher copy, or communication from the RTA can strengthen your claim. Even if uploads aren’t supported for a specific feedback type, noting that you possess proof in the remarks is advisable.

Tracking Feedback Status

Once you submit your feedback, the AIS portal allows you to track its status. You can usually see the feedback you’ve submitted for each transaction. The status might initially show as ‘Submitted’. Later, it may change based on the action taken by the Income Tax Department or the Reporting Entity (who receives the feedback). Potential statuses include ‘Accepted’ (meaning the correction is acknowledged) or ‘Rejected’ (meaning the reporting entity stands by the original information). Monitoring the status helps you understand if the discrepancy is formally resolved in the system.

Impact on Your Income Tax Return (ITR) Filing

Submitting feedback on AIS is important, but it directly impacts how you should approach your actual dividend income tax reporting India when filing your Income Tax Return (ITR).

Reporting Correct Income in ITR

This is the most critical point: Regardless of what the AIS shows, even if it’s incorrect and you’ve submitted feedback, you must report your actual dividend income accurately in your ITR. Your ITR filing must reflect the true income you earned during the financial year based on your own records (bank statements, dividend statements, etc.). If you’re unsure about online filing, you might benefit from our guide on How do I File My Income Tax Return Online in India. Do not simply copy potentially inflated or incorrect figures from the AIS into your ITR, as this would mean filing an incorrect return and potentially overpaying tax or facing issues later if the income was understated in AIS but higher in reality.

Reconciling AIS Feedback with ITR

When filing your ITR, ensure the dividend income figure you declare aligns with your actual records and the feedback you submitted on the AIS portal. Ideally, the feedback you provide will be processed, and the corrected value will reflect in the Taxpayer Information Summary (TIS), which is often used for pre-filling ITR forms. However, ITR filing deadlines might arrive before the AIS/TIS is updated by the reporting entity. In such cases:

• File your ITR with the correct income figure based on your records.
• If possible, keep a record of the feedback submitted (e.g., acknowledgment number or screenshot).
• While the ITR form itself might not have a specific field for AIS feedback references, ensure your own documentation clearly links your filed income to your bank records and the feedback provided.
• The submitted feedback serves as your formal intimation to the department about the discrepancy in the data provided by the third party.

What if the Reporting Entity Doesn’t Correct the Data?

It’s possible that despite submitting feedback to rectify incorrect AIS dividend data, the reporting entity might not act on it promptly, or they might disagree and not update the information reflected in AIS/TIS before you need to file your ITR.

In this scenario:

1. Stick to Accuracy: Continue to report your actual dividend income in your ITR based on your verifiable records.
2. Preserve Evidence: Keep all supporting documents meticulously. This includes bank account statements clearly showing the credited dividend amounts, dividend warrants or certificates, demat account statements, and copies of any communication you might have had with the company or its RTA regarding the dividend.
3. Retain Feedback Proof: Keep a record of the feedback you submitted on the AIS portal, including the date and the substance of your correction request.
4. Respond if Queried: If the Income Tax Department sends a notice regarding the AIS data mismatch for dividends, you will be prepared to respond effectively with your documentation and proof of the feedback submitted, demonstrating that you made a reasonable attempt to get the source data corrected and filed your return based on factual income. Your submitted feedback acts as crucial evidence of your proactive approach.

Conclusion

The Annual Information Statement is a valuable tool for taxpayers, but its accuracy, especially for AIS reporting of dividend income, needs careful verification. Finding errors can be concerning, but the Income Tax Department provides a clear mechanism to address them. By regularly checking your AIS, promptly identifying any incorrect dividend income in AIS, and diligently following the AIS dividend income correction process through the feedback facility, you can ensure greater accuracy. Remember, the key is to always report your actual income in your ITR, backed by your records, while simultaneously using the feedback mechanism to rectify incorrect AIS dividend data. This proactive approach is essential for accurate dividend income tax reporting India and smooth tax compliance.

Don’t let AIS discrepancies complicate your tax filing. Be vigilant, verify your data, and take corrective action when needed.

Need help navigating your AIS or ensuring accurate ITR filing? Facing issues with incorrect dividend income in AIS or need expert assistance with your tax compliance? TaxRobo’s experts are here to assist. We offer services ranging from AIS reconciliation and feedback submission to comprehensive ITR filing. Contact us today for seamless tax compliance!

Frequently Asked Questions (FAQs)

Q1: How often should I check my AIS for dividend income updates?
Answer: It’s best practice to check your AIS periodically throughout the year, but it’s absolutely essential to review it thoroughly before filing your Income Tax Return (ITR). The Income Tax Department updates AIS data as and when it receives information from reporting entities, so checking closer to your filing date gives you the most current picture.

Q2: What happens if I file my ITR with the correct dividend income, but the AIS still shows the incorrect amount?
Answer: You have fulfilled your primary legal obligation by reporting your true income in the ITR. As long as you have also submitted feedback on the AIS portal regarding the incorrect dividend income in AIS, you have taken the necessary steps. Keep your supporting documents (bank statements, etc.) and proof of feedback submission readily available. If the department raises a query about the mismatch, you can provide these documents as justification.

Q3: Can TaxRobo help me with the AIS dividend income correction process?
Answer: Yes, absolutely. TaxRobo provides expert assistance in reviewing your Annual Information Statement, identifying discrepancies like incorrect dividend income in AIS, guiding you through or handling the feedback submission for the AIS dividend income correction process, and ensuring your ITR is filed accurately reflecting your true income. Contact TaxRobo for personalized support.

Q4: Is the feedback submitted on AIS final, or can the Income Tax Department still question it?
Answer: Submitting feedback initiates a correction process and informs the department of your assertion. While feedback, especially with clear remarks or supporting proof, is often accepted and leads to correction by the reporting entity, it’s not automatically final. The Income Tax Department or the reporting entity might still seek further clarification or reject the feedback if they believe the original information is correct or your proof is insufficient. Reporting the correct income in your ITR and maintaining strong documentation remains paramount.

Q5: Where does the dividend income data in AIS come from?
Answer: The dividend income information displayed in your AIS primarily originates from Statement of Financial Transactions (SFT) filings submitted by the companies that paid the dividend or their appointed Registrar and Transfer Agents (RTAs). These entities are legally required to report details of significant financial transactions, including dividend payments distributed to shareholders and unitholders, linked to their PANs.