Synopsis: AIS lists every high-value transaction against your PAN but showing up there doesn’t mean you owe tax. This article shows a clear breakdown of 10 common AIS entries that generally do not create an income-tax liability
As the ITR filing deadline for AY 2026-27 approaches, many taxpayers panic on spotting large transactions in their AIS. Tax experts clarify that AIS is an informational, reconciliation tool not a statement of tax liability and several routine entries in it don’t attract any tax at all.
What is AIS, and why does it worry taxpayers?
The Annual Information Statement (AIS) provides a consolidated view of financial transactions reported against your PAN by various reporting entities . AIS aids the Income Tax Department in pre-filling the Income Tax Returns. It should be noted that the mere presence of any transaction in the AIS doesn’t necessarily make it a taxable transaction. Taxability depends on the nature of the transaction and the provisions of the Income-tax Act, not merely on its inclusion in AIS.
10 AIS Transactions That Are Usually Not Taxable
1. Buying shares or mutual funds (including SIPs)
Purchasing stocks or mutual fund units even through recurring SIPs is simply an investment. No tax event occurs at the time of purchase. Tax applies only later, when you sell or redeem the units and actual capital gains (or taxable distributions) are realised.
2. Buying immovable property
Purchasing a house, flat, or land is not taxable for the buyer. It may show up in AIS if the transaction value crosses the reporting threshold, but that’s purely informational. What the buyer does need to handle is a compliance step, not a tax: under Section 194-IA, if the sale consideration or the stamp duty value, whichever is higher, is ₹50 lakh or more, the buyer must deduct 1% TDS from the payment to the seller and deposit it via Form 26QB. This TDS obligation is separate from and often confused with TCS, which doesn’t apply here. Any tax liability on the transaction (capital gains) falls on the seller, not the buyer.
3. Credit card bill payments
High-value credit card payments, even those running into several lakhs, often appear in AIS. But this is simply the settlement of personal expenditure already incurred and does not represent income. Paying off a credit card bill, regardless of size, does not by itself create any tax liability.
4. Opening a Fixed Deposit or Recurring Deposit
Investing in an FD or RD would be an investment of your own money. Time deposits with balances greater than the reporting threshold are reported on AIS but only the interest earned on the deposit is taxable; the principal invested is not.
5. FD/RD maturity proceeds
When an FD or RD matures, the principal amount returned to you is simply the return of your invested capital. It is not a source of income and is not taxable. However, the interest earned during the tenure is taxable.
Also read: How Much Penalty You May Have to Pay If Caught in an Income Tax Raid?
6. Cash deposits to your own bank account
Once the cash deposits exceed the prescribed threshold limits, which are usually ₹10 lakh for savings account and ₹50 lakh for current account, in a financial year, the cash deposits are reported in AIS under the Specified Financial Transactions (SFT) framework. However, when you deposit your own money, whether it comes from your personal savings or the money that you have built up, it is not income. Cash deposits from explained sources are generally not taxable. However, unexplained cash deposits may attract tax. Interest earned on the deposited amount is taxable.
7. Cash withdrawals
Cash withdrawals from your own bank account are not taxable. However, banks may deduct TDS under Section 194N if cash withdrawals cross specified annual limits (₹1 crore generally, or lower limits for certain non-filers of ITR). This TDS is not a tax on income but a tax collection mechanism adjustable against your final tax liability.
8. Transfers between your own accounts
Transfers from one of your own bank accounts to another are not income and do not result in any taxable income. Transfer(s) could still be flagged in AIS if they are large transfers (and flagging is not synonymous with taxability).
9. Gifts received from specified relatives
Under Section 56(2)(x) of Income-tax Act, the assets or cash received as gifts by the specified family members like parents, spouse or siblings are fully tax free. Such exempt gifts should be disclosed under the appropriate exempt income section of the ITR wherever applicable.
10. Foreign remittances for education or personal use
Amounts remitted abroad under the Liberalised Remittance Scheme (LRS) for personal use or a child’s education are not considered income and are not taxable as such. However, after approaching the prescribed limit in a financial year, the bank which remits the amount is liable to collect TCS as per section 206C(1G). This is not an extra tax burden but is adjustable against the final tax liability at the time of filing of ITR, or refundable if tax liability is less.
Also Read: How Much Penalty Will You Pay for Missing the ITR Deadline? 12 Penalties Taxpayers Should Not Ignore
What actually creates a tax liability
Salary income, Interest earned on FDs/savings accounts, Dividend income, Rental income, Capital gains on sale of shares, mutual funds, or property, Business or professional income
Before you file
- Compare your AIS against Form 16, Form 26AS, bank statements, interest certificates, and capital gains statements.
- If you spot duplicate entries, inaccurate information, or transactions that don’t belong to you, submit feedback through the AIS portal.
- Remember that an AIS entry, by itself, does not trigger a notice but an unexplained mismatch between your declared income and your AIS, left unreconciled, might invite scrutiny
Bottom line
AIS is designed to help you file correctly, not to catch you out on transactions that were never taxable to begin with. Understanding which entries are informational and which are income is the difference between a stress-free filing season and unnecessary anxiety over numbers that don’t affect your tax bill.
