How to Fix Interest Income Mismatch in AIS and ITR
- Nimisha Panda
- 2 days ago
- 9 min read
Interest income mismatch between the Annual Information Statement and the Income Tax Return is one of the most frequent issues flagged during tax processing in India. Banks, NBFCs, and other entities often report interest at different times, causing figures in AIS to differ from what appears in the taxpayer’s ITR. These discrepancies commonly trigger notices under sections 143(1) or 139(9), delay refunds, or lead to incorrect tax calculations. Early reconciliation helps avoid avoidable errors, and platforms like TaxBuddy make this process simpler by identifying mismatches before the return is filed.
Table of Contents
Understanding Interest Income Mismatch in AIS and ITR
Interest income mismatch occurs when the figures reported in the Annual Information Statement don’t match the values declared in the Income Tax Return. AIS captures data directly from banks, NBFCs, corporate deposit issuers, and other reporting entities. These institutions submit information at different intervals, sometimes late or in bulk, resulting in totals that vary from the amounts taxpayers calculate from their own bank statements. When the mismatch is significant, automated systems at the Income Tax Department flag the return and issue adjustments or notices. Since interest income is taxable under the “Income from Other Sources” head, consistency between AIS and the ITR is crucial for accurate computation and timely processing.
Why Interest Income Mismatch Happens
Interest income mismatch often begins with timing differences. Banks may credit interest quarterly but report it annually. FDs renewed automatically may show combined interest entries that taxpayers overlook. Some institutions also report cumulative interest instead of breakup-wise details, leading to confusion during filing. Mistakes occur when interest from small savings accounts, recurring deposits, NRO accounts, or corporate bonds is left out of the ITR, even though AIS captures them. Duplicate reporting—where two entities report the same entry—is another source of conflict. Typographical errors, wrong PAN mapping, changes in account ownership, or delays in data submission further widen the gap between AIS data and what appears in the return.
Steps to Fix Interest Income Mismatch in AIS
Fixing the mismatch begins with downloading the AIS from the Income Tax portal. Each interest entry must be cross-checked with bank statements, FD receipts, passbooks, interest certificates, and Form 26AS. Any difference should be noted carefully. If an entry is incorrect, inflated, or duplicated, AIS Feedback must be submitted with the correct values. Supporting documents help the department validate the claim. When all entries have been reviewed and reconciled, the corrected total should be used while preparing or revising the ITR. If the mismatch relates to multiple years or older deposits, additional verification may be needed to ensure the figures align with past filings.
How to Report Interest Income Correctly in ITR
Interest income must be declared under “Income from Other Sources” in Schedule OS of the ITR. Savings account interest, FD interest, RD interest, NRO interest, corporate deposit interest, and interest earned from cooperative societies all fall under this section. Each type must be grouped and added accurately, especially when deposits exist across several banks. TDS deducted by banks reflects in Form 26AS and should be matched before reporting tax credit. When AIS reflects a different number, the taxpayer should still disclose the correct amount backed by documentation. Underreporting interest, even unintentionally, can lead to adjustment notices under section 143(1), delaying refunds.
Using AIS Feedback for Incorrect Interest Entries
AIS Feedback is the official correction mechanism provided by the Income Tax Department. When a wrong entry appears—such as inflated interest, duplicate figures, or interest credited to the wrong PAN—feedback can be submitted directly against that line item. Options include “Information is correct,” “Information is not fully correct,” and “Information is related to other PAN.” The taxpayer must select the correct feedback type and provide the accurate numbers. Uploading supporting evidence strengthens the case and accelerates the update. Although corrections may take time to reflect, filing the ITR using correct figures helps avoid computation errors and notices while processing.
Common Errors Made While Declaring Interest Income
A frequent oversight is reporting only TDS entries while ignoring gross interest. Some taxpayers declare FD interest only on maturity rather than annually, which conflicts with the reporting done by banks. Savings account interest beyond the ₹10,000 deduction limit under Section 80TTA is often left out. Interest from joint accounts mistakenly gets reported under the wrong PAN, leading to inflated income in AIS. Misinterpreting cumulative FD statements, skipping interest from senior citizen schemes, or relying solely on pre-filled data without verification are other common errors. These mistakes widen the mismatch and trigger recomputation or queries from the department.
Fixing AIS and ITR Mismatch After Receiving a Notice
When a notice arrives under section 143(1) or 139(9), the first step is to review the discrepancy highlighted by the department. All reported interest entries must be compared with AIS, Form 26AS, and internal records. If the department’s correction is accurate, the taxpayer must accept it and pay the difference. If the correction is incorrect, a revised ITR should be filed with the correct figures and proper documentation. An explanation should be submitted through the e-proceeding portal. Timely response prevents further action, and platforms like TaxBuddy streamline this process by generating accurate summaries that can be attached with the reply.
How Bank Details Affect AIS and Tax Refunds
Bank account details have a direct impact on AIS accuracy and refund processing. If the PAN is linked to accounts no longer in use, the AIS may reflect unexpected entries. Incorrect or outdated account numbers in the ITR lead to refund failures, even when the return is processed successfully. Refund re-issue requests delay the entire cycle. Updated bank KYC ensures correct mapping, and reconciliation becomes easier. Tools offered by platforms like TaxBuddy automatically flag mismatched account details, prompting corrections before filing the return, reducing the chances of refund-related complications.
How TaxBuddy Helps Resolve Interest Income Mismatches
TaxBuddy uses automated checks to compare AIS, Form 26AS, and ITR entries. The system identifies mismatches, flags missing interest amounts, and highlights duplicated entries. It also verifies bank details, ensuring refund-safe accuracy. The platform guides taxpayers on whether AIS feedback is required and assists in preparing revised returns when discrepancies persist. With human review layered over automated validation, TaxBuddy helps users avoid notices triggered by interest mismatches and ensures that returns are filed with the correct, reconciled figures every time.
Avoiding Interest Income Mismatch in Future Filings
Maintaining updated bank passbooks, downloading interest certificates annually, and reviewing AIS before filing the return are practical habits that prevent mismatches. All deposits—FDs, RDs, corporate bonds, and savings accounts—should be tracked systematically. Matching TDS entries with Form 26AS ensures correct tax credit reporting. Filing returns only after AIS has been reviewed helps avoid errors that automated systems quickly detect. Using an automated filing platform like TaxBuddy adds an additional layer of verification, reducing the risk of mismatches in future years.
Conclusion
Interest income mismatch remains a common yet preventable tax filing issue. Reconciling AIS entries with internal records, submitting feedback for inaccuracies, and reporting the correct interest income in Schedule OS ensure smooth processing under the Income Tax Act, 1961. Automated tools and expert support make this easier, especially when multiple accounts or old deposits complicate calculations. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? TaxBuddy provides two structured pathways for tax filing. The self-filing option is built for individuals with straightforward income profiles such as salary, basic interest earnings, or simple capital gains. The system automatically imports data from PAN, AIS, TIS, Form 26AS, and Form 16, reducing manual effort and preventing basic errors. For more detailed cases involving business income, rental income from multiple properties, foreign assets, ESOP taxation, F&O trading, crypto gains, or past notices, the expert-assisted plan is more suitable. Here, qualified tax professionals review every detail, prepare the computation, resolve mismatches, and ensure accurate filing.
Q2. Which is the best site to file ITR? The Income Tax Department’s e-filing portal is the primary platform for filing ITR. It is government-operated and supports all return types. Many taxpayers, however, choose services like TaxBuddy because they offer additional layers of assistance—automated validation, AIS–ITR mismatch detection, guided inputs, personalised recommendations, and real-time notice assistance. This combination of automation and expert review makes TaxBuddy one of the preferred platforms for smooth, error-free filing.
Q3. Where to file an income tax return? An income tax return can be filed directly on the Income Tax Department’s portal or through trusted third-party platforms. TaxBuddy makes the process easier by auto-fetching tax data, running validation checks, advising on deductions, and preparing the computation summary. It also supports both mobile and desktop filing, making it convenient for individuals who prefer guided help.
Q4. What causes interest income mismatch between AIS and ITR? Interest income mismatch happens when banks or financial institutions report data differently from what is entered in the ITR. Timing differences, delayed reporting, cumulative entries instead of period-wise figures, duplicate reporting, wrong PAN linking, and unreported deposits are the most common causes. Errors also occur when taxpayers declare interest only after FD maturity or forget to include interest from savings accounts, corporate deposits, or RDs, even though AIS captures them.
Q5. How can AIS feedback help in correcting wrong interest entries? AIS feedback allows taxpayers to respond to incorrect entries directly on the portal. When interest figures are inflated, duplicated, or reported to the wrong PAN, feedback can be submitted against each line. The system asks for the correct value and a brief justification. Supporting documents like bank statements or interest certificates add clarity. Once reviewed, the department updates the records, which helps avoid mismatches when the return is processed.
Q6. What should be done if a bank reports incorrect interest income? If the bank reports incorrect interest, the AIS feedback tool should be used to notify the Income Tax Department. The correct amount must be entered along with a justification, and documents should be attached for verification. Filing the ITR with accurate figures prevents computational adjustments. In cases where repeated errors surface, contacting the bank for data correction and ensuring proper PAN linkage becomes necessary.
Q7. Will an interest income mismatch delay the tax refund? A mismatch almost always delays refund processing because the system halts computation until the discrepancy is resolved. If the department adjusts the income under section 143(1), the taxpayer may receive a revised refund or a demand. Filing accurate figures, submitting AIS feedback, and ensuring updated bank details help avoid refund delays.
Q8. How to avoid receiving a notice for AIS and ITR mismatch? Reviewing AIS before filing the return is the easiest way to prevent mismatch notices. Matching interest entries with bank records and ensuring consistent reporting across Form 26AS, TIS, and AIS reduces errors. Using automated filing platforms that highlight inconsistencies, such as TaxBuddy, helps catch issues early. Filing only after cross-verification ensures the return aligns with the department’s data, lowering the chances of receiving a notice.
Q9. What happens if a notice under section 143(1) is received for mismatch? A notice under section 143(1) indicates the system has adjusted the income based on AIS data. The taxpayer must review the adjustment and compare it with their own records. If the department’s correction is accurate, the adjustment should be accepted. If not, a revised return must be filed with the correct figures and supporting evidence. Timely response ensures the issue is closed without further escalation.
Q10. Can interest income mismatch occur even if TDS is correctly deducted? Yes. TDS reflects only the tax deducted by banks or institutions. The actual interest payable can still differ. For example, if a bank deducts TDS on FD interest but reports the total interest late or inconsistently, AIS may not match the amount declared in the ITR. Similarly, savings interest is usually earned without TDS, and taxpayers may forget to include it. As a result, TDS accuracy alone does not guarantee matching figures.
Q11. How can taxpayers keep track of interest income from multiple sources? Maintaining annual interest certificates, checking bank passbooks quarterly, noting FD renewal cycles, and downloading AIS before filing are effective practices. Consolidating data in a simple spreadsheet also helps track the amounts earned from different accounts. Automated tools offered by TaxBuddy make this easier by collecting, grouping, and validating interest figures from various sources.
Q12. Does TaxBuddy help fix AIS and interest income mismatch issues? TaxBuddy’s platform is designed to detect mismatches automatically. It compares AIS, Form 26AS, and self-reported data to identify missing or overstated interest. The system flags inconsistencies, suggests corrections, and assists in preparing or revising the ITR. When a notice is involved, TaxBuddy’s experts guide taxpayers through drafting responses, submitting explanations, and ensuring the issue is resolved efficiently.
