AIS, TIS & ITR: Reconciling Your Capital Gains

What are AIS and TIS?

The Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) are the Income Tax Department's digital records of every financial transaction reported to them by brokers, banks, mutual fund houses, and depositories. They're your first window into what the government knows about your investments.

AIS (Annual Information Statement)

Introduced in 2021 as a replacement for the old Form 26AS, the AIS is a comprehensive statement showing all financial transactions reported to the Income Tax Department. Sources include:

• NSE and BSE (equity sales via your broker)
• Depository participants like NSDL and CDSL (your shareholdings, corporate actions)
• Mutual fund houses (MF purchases, sales, dividends)
• Banks (interest income, TDS)
• Insurance companies (claim proceeds, premiums)
• Foreign remittances, specified financial transactions (SFT)

The AIS is far more comprehensive than the old 26AS. It includes securities without STT, foreign transactions, and granular transaction-level detail. Access it on the Income Tax e-filing portal: income-tax.gov.in → Login → AIS → Download PDF or JSON.

TIS (Taxpayer Information Summary)

The TIS is AIS data aggregated and pre-classified by the Income Tax Department into standard categories:

• Salary: W-2 equivalent for salaried employees
• Interest: Bank interest, fixed deposits, bonds
• Dividends: Company-wise dividend income
• Capital gains: Separated into STCG and LTCG
• Rent: Rental income from property
• Other: Specified financial transactions

When you file ITR online, the portal pre-fills your ITR form with TIS data. But here's the critical issue: this pre-filled data is often incomplete or incorrect. Your job is to reconcile it against your actual broker statements before filing.

Reading Your AIS: Capital Gains Section

When you download your AIS (PDF or JSON format), the capital gains section shows equity and MF transactions. Here's what you'll see and how to interpret it:

Transaction Structure

• Sell value (Reported Value): The amount you received. Always present.
• Buy value (Cost of Acquisition): What you paid. Often missing or wrong.
• Holding period: Sometimes calculated by AIS, sometimes blank.
• Gain/Loss: Reported value minus cost. Frequently incorrect if cost is missing.

Worked example: You sell 100 shares of Nifty50 stock for ₹1,00,000. The AIS might show:

• Reported value: ₹1,00,000 ✓
• Cost of acquisition: ₹0 ✗ (wrong | you paid ₹65,000)
• Gain: ₹1,00,000 ✗ (should be ₹35,000)

Common AIS Errors

AIS data is not audited by humans. The errors are systematic:

• Missing acquisition cost: AIS defaults to ₹0 when your broker's feed doesn't include the purchase price. This inflates your capital gain dramatically.
• Corporate action adjustments missing: If you held a stock through a bonus or split, AIS doesn't adjust the original cost. Example: bought 100 shares, received 100 bonus shares, sold 200. AIS might show cost for 100 only.
• FIFO not applied correctly: If you bought in tranches and sold some, AIS may not follow your FIFO (first-in-first-out) lot matching.
• Off-market transfers flagged as sales: If you transferred shares to a spouse or family, it might appear as a sale in AIS.
• MF dividend reinvestment mismatched: Reinvested dividends sometimes show as separate transactions with wrong cost bases.

The platform provides a "Modified Value" column where you can flag errors and submit corrections to the Income Tax Department. Most investors ignore this, but you shouldn't.

TIS: The Aggregated View

When you log into the ITR portal, you see your TIS dashboard. This is the data that will pre-fill your ITR form. The TIS categories are straightforward, but the totals often don't match reality:

Reconciliation: Step-by-Step Process

This is the actual work. Done right, it saves you thousands in overpaid taxes. Done wrong, you face scrutiny or assessment. Here are the steps:

Step 1: Download Your Records

• AIS: income-tax.gov.in → AIS → Download PDF and JSON
• Broker statement: Zerodha (Console → Tax P&L), Angel One, Groww | download your profit/loss statement for the financial year
• MF statements: If you held mutual funds, download the annual cap gains statement from your AMC's website or CAMS portal

Step 2: Match Sale Transactions

Transaction by transaction, match AIS against your broker statement. Create a spreadsheet with columns: Date, Script, Qty, Sell Price (Broker), Sell Price (AIS), Match? For each trade, confirm the sell value matches. If dates don't align (AIS might show settlement date, broker shows trade date), investigate.

Step 3: Check Acquisition Costs

This is where 90% of errors occur. For each sale in AIS:

• Pull up your broker's tax P&L statement for the same stock
• Compare the cost of acquisition shown in AIS versus your broker's records
• If AIS shows ₹0 or a wrong figure, note the correct cost from your broker
• Calculate the correct LTCG or STCG using your broker's cost, not AIS's figure

Step 4: Verify Holding Periods

Calculate the holding period yourself. AIS may flag a trade as long-term when you actually held it for 11 months. Cross-check:

• Purchase date from your broker's statement
• Sale date from your broker's statement
• If less than 12 months: STCG (taxed at 20%)
• If 12 months or more: LTCG (taxed at 12.5% above ₹1.25L)

Step 5: Look for Missing Transactions

AIS is fed by brokers. If a broker has a reporting delay or system issue, your transaction might not appear in AIS. Check:

• Your broker's statement for any sale not in AIS
• AIS for any sale not in your broker's statement (rare, but possible if your brother or spouse transacted through the same Demat account)

Step 6: Handle Mutual Fund Redemptions

MF transactions are trickier. AIS shows scheme-wise redemptions and gains. But if you bought via Systematic Investment Plan (SIP), your cost base per unit is different for each installment. Your AMC's cap gains statement accounts for this. Cross-check:

• Total units redeemed (AIS) vs your AMC statement
• Cost of acquisition in AIS vs AMC's calculated cost base
• Holding period: whether redemption qualifies for LTCG (12 months for equity MF)

Step 7: Claim Grandfathering If Applicable

If you held any equity from before 31 January 2018, you qualify for grandfathering: the acquisition cost for tax purposes is taken as the higher of actual cost or FMV on 31 Jan 2018. AIS does NOT automatically apply this. You must:

• Identify holdings purchased before 31 Jan 2018
• Find the FMV on 31 Jan 2018 (historical stock price)
• Calculate LTCG using the higher of actual cost or FMV
• File ITR-2 Schedule CG with grandfathering applied manually

Step 8: Submit Corrections to AIS

The ITR portal allows you to submit feedback on AIS errors. If AIS shows ₹0 cost on a stock you sold, or an incorrect holding period, you can submit a correction request to the Income Tax Department. They don't always update in real-time, but your correction is documented for audit defense.

Filing ITR-2 with Capital Gains

Once you've reconciled AIS against your actual figures, you're ready to file ITR.

Which ITR Form?

• ITR-2: Use this if you have capital gains but no business income (salary + capital gains).
• ITR-3: Use this if you have F&O business income (treated as business, not capital gains).

Schedule CG: Capital Gains Worksheet

Schedule CG is where you enter your capital gains. It has separate sections for STCG and LTCG. Enter your reconciled figures here, not the AIS figures.

Section 111A (STCG on Equity)

For short-term capital gains on equity (held less than 12 months):

• Taxed at flat 20% (post-July 2024)
• Enter in specific row under Section 111A in Schedule CG
• Must have STT (Securities Transaction Tax) paid on the transaction

Section 112A (LTCG on Equity)

For long-term capital gains on equity (held 12+ months):

• Taxed at flat 12.5% above ₹1.25L exemption
• Example: LTCG = ₹2,50,000. Tax = 12.5% × (₹2,50,000 - ₹1,25,000) = ₹15,625
• Enter the first ₹1,25,000 as exempt, then the balance at 12.5%
• The ₹1.25L exemption applies once per financial year per PAN

Grandfathering Worksheet

For holdings purchased before 31 Jan 2018, the ITR form has a grandfathering section. Enter:

• Original cost of acquisition
• FMV on 31 Jan 2018
• Higher of the two is used as your cost base for LTCG

Loss Carry-Forward

If you realized capital losses (STCL or LTCL) in the year, you can carry them forward to offset gains in future years. But you must file ITR before the due date (31 July) to preserve the carry-forward. An income under ₹5L that doesn't require filing can also claim loss carry-forward, but you must file the ITR return anyway. Many investors file late and lose years of loss carry-forward benefits.

Tools for Reconciliation

You can reconcile manually (spreadsheet), or use specialized tools:

Broker Tax P&L Reports

• Zerodha: Console → Reports → Tax P&L → Download CSV. Includes all trades, cost bases, holding periods.
• Angel One, Groww, 5paisa: Similar tax P&L exports in their dashboards.
• These are your most reliable source because they're generated by the entity that reported to the Income Tax Department.

CA Software

• ClearTax, Quicko, myITreturn: These platforms help you file ITR directly. Some integrate with brokers, pulling your tax data automatically.
• Advantage: They guide you through Schedule CG and flag common errors.
• Disadvantage: They still rely on AIS pre-fill, so you still need to reconcile.

DIY Spreadsheet Approach

Download AIS as JSON, export your broker's CSV, and reconcile in Excel or Google Sheets. This is tedious but gives you complete control and creates a permanent audit trail. Steps:

• Parse AIS JSON or PDF manually into a spreadsheet
• Pull broker's tax P&L as CSV
• Match sales transaction-by-transaction
• Flag discrepancies in a separate column
• Calculate correct LTCG, STCG, losses based on reconciled figures
• File ITR with reconciled figures, keep spreadsheet for 5 years as backup documentation

Why CAs Still Get It Wrong

Many CAs trust AIS blindly. They file ITR using pre-filled TIS data without reconciling against broker statements. Result: their clients overpay taxes. A good CA will ask for your broker's tax P&L statement and reconcile. If yours doesn't, you might be paying unnecessary tax.

Author's Reconciliation Case Study: ₹3.5L Discrepancy

In FY2024, I realized ₹35 equity trades across 8 brokers (yes, I test everything). AIS reported ₹14,70,000 in capital gains. My actual gains were ₹11,20,000. The ₹3,50,000 difference broke down as:

• ₹1,80,000: Missing acquisition costs in AIS (7 trades, all from a secondary broker with poor ITD integration)
• ₹95,000: Bonus share corporate action not reflected in AIS cost base
• ₹60,000: Grandfathering benefit on 3 old holdings, not applied in AIS
• ₹15,000: Holding periods calculated wrong (settlement date vs trade date confusion)

If I had filed ITR using AIS figures, I'd have paid 12.5% tax on ₹14.7L = ₹1,82,500 (minus ₹1.25L exemption). Actual tax due on ₹11.2L = ₹1,26,250. Overpayment = ₹43,750 per year. Add this up over a 10-year investing career, and you're talking ₹4,37,500 in unnecessary taxes.