Direct Answer
To reconcile 26AS and AIS with bank statements, download both forms from the Income Tax Portal, extract all credit entries, and match them against corresponding deposits in your bank statements. Ensure every TDS deduction reflects the gross receipt in your bank, and report any discrepancies via the AIS feedback system.
Why Reconciliation Matters
Mismatches between Form 26AS, the Annual Information Statement (AIS), and your actual bank deposits are the leading cause of defective return notices under Section 139(9) or intimation under Section 143(1) of the Income Tax Act. The tax department uses AIS to track high-value transactions, dividends, and interest, making exact reconciliation mandatory before filing.
Step-by-Step Checking Process
- Download the Source Documents: Log in to the Income Tax e-Filing portal. Download Form 26AS from TRACES and the AIS/TIS from the Services tab. Export your bank statements for the same financial year.
- Gross vs. Net Matching: Your bank statement shows the net amount received. Form 26AS shows the gross amount and the TDS deducted. Ensure
Gross Amount - TDS = Bank Deposit. - Identify Timing Differences: Cheques cleared in early April may belong to the previous financial year's invoices. Note these timing differences to avoid double taxation.
- Spot Missing Entries: If a client paid you and deducted TDS but it hasn't appeared in 26AS, follow up with the deductor to file their TDS return.
Practical Example
If you raised an invoice for ₹1,00,000 and 10% TDS (₹10,000) was deducted under Section 194J:
- 26AS shows: Receipt of ₹1,00,000, TDS of ₹10,000.
- Bank Statement shows: A single credit of ₹90,000.
- Reconciliation: You must declare ₹1,00,000 as gross income. If you only declare ₹90,000, the AIS will flag a ₹10,000 under-reporting mismatch.
Handling Mismatches via AIS Feedback
If you find entries in the AIS that do not belong to you or are duplicated, you must submit online feedback in the AIS portal choosing options like 'Information is not fully correct' or 'Information relates to another PAN/Year'. Do this before filing the return.