Filing your ITR for AY 2026-27? This one check could help you avoid income tax notices

Most taxpayers focus on calculating their income and claiming deductions while filing their income tax returns. However, in today's digital tax environment, there is another step that has become just as important: ensuring that the information in your return matches the data already available with the Income Tax Department.

According to Rajiv Thakkar, Partner – Direct Tax at Bhuta Shah & Co LLP, taxpayers should pay close attention to data reconciliation before filing their returns.

"Accurate disclosure after a comprehensive exercise of data matching and reconciliation with the information available with the Income Tax Department has now become a critical part of tax compliance," says Thakkar.

"The tax administration has moved from a traditional assessment-based system to a technology-driven and data-centric framework powered by artificial intelligence, machine learning and extensive third-party reporting," Thakkar explains.

"Many notices today arise because of data mismatches rather than tax evasion," he says.

Before filing a return, taxpayers should therefore review their AIS, TIS and Form 26AS and compare the information with their own records, such as bank statements, investment statements and broker reports.

This helps ensure that income such as interest, dividends and capital gains has been reported correctly and that taxes deducted at source have been properly accounted for.

Thakkar advises taxpayers not to ignore transactions that appear in AIS or Form 26AS.

"Where a transaction is reflected in the Department's records, it is advisable to disclose it appropriately in the return, explain the tax treatment wherever required and maintain supporting documents," he says.

A little time spent on reconciliation before filing can go a long way.

"A proper reconciliation exercise can help reduce future disputes, enable faster responses to notices and demonstrate a genuine compliance approach," says Thakkar.