When the ITR season opens, some investors discover a notice has already been generated because the Income Tax Department received their transaction data months earlier. Share sales, dividends, and mutual fund redemptions are all reported before the investor thinks about filing.

That report is called the Annual Information Statement (AIS).

Introduced in November 2021, AIS replaced the older and more limited Form 26AS. Your broker, depository (CDSL or NSDL), mutual fund houses, and registrar and transfer agents are legally required to report every significant transaction linked to your PAN to the Income Tax Department. If you buy or sell stocks, run SIPs, or receive dividends, all of it is already in your AIS before you file your ITR.

What Is AIS?

AIS is a consolidated financial record built from data submitted by banks, brokers, depositories, mutual fund houses, and RTAs to the Income Tax Department through a Statement of Financial Transactions (SFT), filed quarterly using your PAN as the identifier under Section 285BA of the Income Tax Act.

It covers far more ground than Form 26AS ever did:

Purchase and sale of listed equity shares
Mutual fund transactions, including purchases, redemptions, and SIPs
Dividend income received from stocks and mutual funds
Off-market demat transfers between accounts
Corporate actions, including bonus shares, stock splits, rights allotments, and IPO credits
TDS is deducted on dividends and interest
Interest on savings accounts and fixed deposits
Foreign remittances

Every entry in AIS shows a Reported Value (what the entity submitted) and a Modified Value (updated after you submit feedback).

What Your Demat Account Shows in AIS

From your broker:
Buy and sell transactions of listed equity shares are reported using the closing price of the transaction date, not your actual execution price. This single difference explains most of the gaps you will see between AIS and your broker’s capital gains report.
From your depository (CDSL or NSDL):
Off-market transfers, bonus share credits, stock split adjustments, rights issue allotments, and IPO allocations. Corporate action entries appear with a zero cost of acquisition, which is technically correct but can look confusing when you first see it.
From RTAs (CAMS or KFintech):
All mutual fund transactions across every AMC, including SIP instalments, lump sum purchases, and redemptions.
From companies directly:
Equity dividends paid during the year. For FY 2024-25, TDS was deducted at 10% on dividends above ₹5,000 under Section 194. Budget 2025 revised this threshold to ₹10,000 from FY 2025-26 onwards. If you are filing for FY 2025-26, the updated threshold applies to you.

How AIS Flows Into Your ITR

Step 1: Reporting entities submit SFT data quarterly under Section 285BA.

Step 2: The Income Tax Department consolidates all submissions into your AIS using your PAN.

Step 3: You log in, review every entry, and flag errors using the feedback tool. Options include “Information is incorrect”, “Duplicate entry”, or “Not related to me”.

Step 4: AIS generates a Taxpayer Information Summary (TIS), a category-wise income summary used to pre-fill your ITR on the portal.

Step 5: You cross-check AIS against your broker’s capital gains statement and file. Use AIS to verify. Use your broker’s capital gains statement to compute.

How to Access AIS:

Log in to incometax.gov.in
Click ‘e-File’, then ‘Income Tax Return’, then ‘View AIS’.
Click ‘Proceed’ and open the AIS tile
Download the PDF

AIS PDF Password: PAN in lowercase followed immediately by date of birth in DDMMYYYY format, with no space between them.

Example: PAN is BAAPM2345C and DOB is 14 March 1990; password is baapm2345c14031990

Feedback Status Tracker (May 2024 update): After you flag an incorrect entry, the AIS portal now shows whether the reporting entity accepted, partially accepted, or rejected your correction. If the entity rejects your feedback, approach them directly with supporting documents such as broker contract notes or a capital gains statement.

Capital Gains Tax Rates After Budget 2024

Type	Holding Period	Tax Rate
Short-Term Capital Gain (STCG)	Less than 12 months	20% (revised from 15%)
Long-Term Capital Gain (LTCG)	12 months or more	12.5% (revised from 10%)
LTCG annual exemption	Not applicable	₹1.25 lakh (revised from ₹1 lakh)

Both rates were revised with effect from 23 July 2024. If you have been referring to older articles that show 15% STCG or 10% LTCG, those figures are outdated.

Realistic Example — Priya's FY 2024-25 AIS

Priya is a salaried professional in Pune. During FY 2024-25:

Bought 200 shares of a company at ₹480 per share in May 2024, a total of ₹96,000
Sold all 200 shares at ₹670 per share in March 2025, a total of ₹134,000, gain of ₹38,000
Received dividends of ₹8,000 from two companies (TDS of ₹800 deducted at 10%, the ₹5,000 threshold applied in FY 2024-25)
A monthly SIP of ₹10,000 in an equity mutual fund is ₹120,000 for the year
Received 100 bonus shares from one holding in December 2024

What appears in Priya’s AIS:

Entry	AIS Reported Value	Actual Value	Reason for Difference
Share purchase (200 shares)	₹95,400	₹96,000	Closing price vs execution price
Share sale (200 shares)	₹133,600	₹134,000	Closing price vs execution price
Dividend income	₹8,000	₹8,000	Correct
TDS on dividend	₹800	₹800	Matches Form 26AS
Mutual fund SIP purchases	₹120,000	₹120,000	Correct
Bonus share credit	100 shares at ₹0	₹0 cost	Correct, bonus shares carry nil cost

What Priya does:
She held the shares for over 12 months, making the ₹38,000 gain LTCG. Since this is under the ₹1.25 lakh annual exemption, she pays no tax on it. She still declares it in ITR-2 under Schedule CG using her broker’s actual figures, not the AIS values. AIS is used only to confirm that all transactions are accounted for.

FIFO — When You Hold the Same Stock at Multiple Prices

When you sell part of a holding bought in multiple lots at different prices, the Income Tax Act requires the FIFO (First In, First Out) method. The oldest shares are treated as sold first.

Example: You bought 100 shares at ₹200 in January 2022 and another 100 shares at ₹350 in August 2023. You sell 100 shares in February 2025.

Under FIFO, the January 2022 lot is treated as sold. These are long-term holdings (held over 12 months) and taxed at 12.5% LTCG on gains above ₹1.25 lakh.

AIS shows your total sale value, but does not apply FIFO. Your broker’s capital gains statement handles this calculation. Using an incorrect cost figure produces a wrong capital gain number even if the AIS sale value is right.

Grandfathering — For Shares Bought Before 31 January 2018

For equity shares or mutual fund units bought before 31 January 2018, the cost of acquisition is taken as the Fair Market Value (FMV) as of 31 January 2018, provided this FMV is lower than the actual sale price.

AIS shows the original purchase date and reported cost, but does not apply the FMV adjustment. If you calculate LTCG on holdings bought before 2018 directly from AIS data without applying grandfathering, you will overstate your taxable gains. FMV data for listed stocks as on 31 January 2018 is available on BSE and NSE. Your broker’s capital gains report typically applies this automatically.

Capital Losses — Set-Off and Carry Forward

Many investors who had a year with losses skip filing ITR. If you do not file or do not declare capital losses in your ITR, the carry-forward window closes permanently.

Capital losses reduce your tax liability but only if you declare them in your ITR on time.

Loss Type	Can Be Set Off Against	Carry Forward Period
Short-Term Capital Loss (STCL)	Both STCG and LTCG in the same year	Up to 8 assessment years
Long-Term Capital Loss (LTCL)	Only LTCG in the same year	Up to 8 assessment years

Example: You made ₹80,000 LTCG from Stock A but lost ₹30,000 from Stock B (both held over 12 months). You pay LTCG tax only on the net ₹50,000, still within the ₹1.25 lakh exemption, so no tax is owed.

AIS will show both the gain and loss transactions from your demat account. Reconcile both, not just the profitable ones.

Inherited and Gifted Shares in AIS

Shares received as an inheritance or a gift appear in AIS as off-market credit entries from the depository.

Inherited shares: The cost of acquisition is the original owner’s purchase price, and the holding period includes the time the original owner held the shares. AIS records the transfer date as the credit date, which can make the holding look recent. For capital gain calculation, the original purchase history applies.

Gifted shares: The donor’s original cost of acquisition becomes your cost, and the holding period also carries over from the donor. When you sell, AIS will show the sale value correctly, but you will need the donor’s original purchase records to compute the correct capital gain.

In both cases, the AIS entry alone is not enough for tax computation. Collect the original purchase records from the estate or donor before filing.

Which ITR Form Should You Use?

Investor Type	Correct ITR Form
Salaried investor with STCG or LTCG from stocks or mutual funds	ITR-2
Investor with intraday trading income (speculative business income)	ITR-3
F&O trader (non-speculative business income)	ITR-3
No capital gains, salary and interest only	ITR-1

Capital gains are declared under Schedule CG in ITR-2 or ITR-3. This is the specific schedule where buy price, sell price, holding period, and gain or loss are entered for each transaction category.

Intraday trading income is not a capital gain. It is speculative business income, taxed at your applicable slab rate. Filing ITR-2 when you have intraday income results in a defective return notice under Section 139(9).

AIS vs Form 26AS

Feature	AIS	Form 26AS
Securities transactions (buy and sell)	Yes, detailed	Not included
Dividend income	Yes	Not directly
Mutual fund transactions	Yes	Not directly
Off-market transfers	Yes	No
TDS and TCS details	Yes	Yes
GST turnover	No	Yes
Authority for TDS credit claim in ITR	Reference only	Binding
Feedback and correction	Yes	No

For claiming TDS credit in your ITR, Form 26AS is the binding document. AIS is broader but works alongside Form 26AS, not as a replacement

Advance Tax on Capital Gains

If your total tax liability for the year, after accounting for TDS already deducted, exceeds ₹10,000, you are required to pay advance tax during the financial year in four instalments:

15% by June 15
45% by September 15
75% by December 15
100% by March 15

Your employer handles TDS on salary. Capital gains and dividends from your demat account fall outside this. If you sold a large equity position in Q1 or Q2, the tax on those gains must be paid during the year, not at ITR filing time. Missing instalments lead to interest charges under Sections 234B and 234C. Reviewing your AIS during the year gives you enough data to estimate whether advance tax applies.

What Happens When AIS and Your ITR Do Not Match

The Income Tax Department’s processing systems compare your declared income against AIS data automatically. A material mismatch can lead to three types of action:

Section 139(9) — Defective return notice: Issued when the return appears inconsistent or incomplete
Section 143(2) — Scrutiny notice: Issued when your return is selected for detailed examination
Section 156 — Tax demand notice: Issued when the department computes a higher tax liability than what you paid

The most common trigger is AIS showing a higher sale consideration for shares (because of the closing price methodology) than what you declared. Small differences supported by your broker’s contract notes are manageable. Large unexplained gaps draw scrutiny.

Already filed and found a mismatch? File a revised return under Section 139(5). You can revise your ITR until 31 December of the assessment year. For FY 2024-25 (AY 2025-26), this deadline is 31 December 2025.

Common Mistakes to Avoid

Using AIS figures directly for capital gain computation
AIS uses closing price values, not actual trade prices. Use your broker’s capital gains statement for computation and treat AIS as a verification check.
Not checking AIS until the last week before the deadline
Raising feedback on an incorrect AIS entry, waiting for the reporting entity to respond, and filing a revised return all take time. Start the review process at least six weeks before the deadline.
Skipping ITR filing after a year with losses
If you do not file or do not declare capital losses in your ITR, the carry-forward window closes permanently. File even when you have no tax to pay.

Filing the wrong ITR form
Intraday profits are business income, not capital gains. Filing ITR-2 for intraday or F&O income produces a defective return notice.

Conclusion

Your demat account activity is not invisible to the Income Tax Department. Every trade, dividend, and mutual fund transaction flows into your AIS through your broker, depository, and mutual fund RTA well before you open the ITR portal. Check your AIS at least six weeks before the filing deadline, cross-check it with your broker’s capital gains statement, and file the right ITR form for your investor profile. Doing this early leaves room to correct errors, raise feedback, and avoid notices that are easy to prevent.