What is the difference between AIS and Form 26AS?

Form 26AS is the older statement focused on tax deducted and collected against your PAN. The Annual Information Statement (AIS) is far wider — it compiles interest, dividends, securities and mutual fund trades, property transactions, foreign remittances and large cash deposits reported by banks, registrars and companies. The department compares your return against AIS automatically, so review it before filing, not after a notice.

Why did I get an SMS or email about a mismatch in my return?

That is an e-campaign nudge: the system compared your filed return against AIS/TIS data and found a gap — commonly interest income, share sales or property transactions. It is not yet a notice. Log in, review the flagged information, and either submit feedback correcting the data or file an updated return. Ignoring it is what converts a nudge into scrutiny.

Does my GST data reach the income-tax department?

Yes. The two departments share data under formal MoUs, and both are linked by PAN. GST turnover reported in your returns is compared against receipts in your ITR — a business showing ₹1.8 crore in GSTR-3B and ₹90 lakh in its ITR is exactly the pattern the systems are built to catch.

What are DRC-01B and DRC-01C in GST?

They are automated intimation forms. DRC-01B fires when the liability in your GSTR-1 exceeds what you paid in GSTR-3B beyond the permitted tolerance; DRC-01C fires when the ITC you claimed in GSTR-3B exceeds what GSTR-2B supports. Both demand an explanation on the portal within 7 days, and non-response can block your next GSTR-1 filing.

Can the department see my bank account?

Not your day-to-day transactions, but banks must report specified financial transactions — including cash deposits of ₹10 lakh or more in savings accounts and ₹50 lakh or more in current accounts in a year, credit card payments above thresholds, and large FDs. These land in your AIS and are matched against declared income automatically.

I found a genuine omission in a filed return. What now?

Fix it before the system does. A revised return is open till 31 December of the year after the tax year; beyond that, ITR-U allows an updated return for up to 48 months with graded additional tax. Voluntary correction is consistently treated more gently than a data-matched addition after scrutiny opens.

How the Tax Department Uses AI to Pick Who Gets a Notice

Most business owners still picture tax enforcement as a person reading files. That person now arrives at step five. Steps one to four are software: data pulled from banks, registrars, marketplaces and your own filings; matched against your returns; scored; and queued. If you understand what gets compared, most notices stop being bad luck and start being predictable — which means preventable.

The income-tax side: AIS, CASS and the nudge machine

Three systems matter. The Annual Information Statement (AIS) compiles what third parties report against your PAN — bank interest, dividends, mutual fund and share trades, property purchases and sales, foreign remittances, large cash movements. CASS (Computer Assisted Scrutiny Selection) applies risk rules to filed returns and picks scrutiny cases with minimal human input. And the e-verification and e-campaign programmes send the SMS every filer has started seeing: “transactions in your AIS do not match your return.”

The practical consequence: the return is no longer the starting point. The data is. By the time you file, the department already holds a third-party picture of your year, and filing something materially different from that picture is what creates the flag. This is also why fixing an omission voluntarily — revised return or ITR-U — is treated so differently from being caught: the system rewards the version where you moved first.

The GST side: matching that runs without an officer

GST was born digital, so its enforcement is further along. What runs automatically today:

DRC-01B — GSTR-1 liability vs GSTR-3B payment. Declare sales in GSTR-1 and pay less in 3B beyond tolerance, and the portal itself demands an explanation within 7 days.
DRC-01C — ITC claimed in 3B vs ITC available in GSTR-2B. The spreadsheet argument (“my supplier will file soon”) now has a form number and a deadline.
IMS — every purchase invoice passes through accept/reject/hold, so your credit trail is explicit and timestamped.
E-way bill and e-invoice cross-checks — goods movement data compared against declared turnover; gaps between e-way bill values and GSTR-1 are a standard analytics report.
Network analysis — fake-ITC rings are detected by graph analytics across GSTINs, which is why a supplier three steps removed from you can still poison your credit chain. Vetting vendors is now self-defence; our ITC guide covers the discipline.

What actually triggers a flag

Comparison	The pattern that gets flagged
GST turnover vs ITR receipts	Healthy sales in GSTR-3B, thin receipts in the ITR
TDS credits vs declared income	26AS shows contract receipts the P&L never mentions
Bank SFT data vs income	Cash deposits or card spends out of line with declared income
GSTR-1 vs GSTR-3B	Liability declared but not paid — DRC-01B territory
GSTR-2B vs GSTR-3B	ITC claimed ahead of what suppliers filed — DRC-01C territory
E-way bills vs declared sales	Goods moving that the returns never sold
AIS securities data vs ITR	Share and mutual fund trades missing from the return

The one-number discipline

Every defence against automated enforcement reduces to a single habit: one set of numbers everywhere. Sales in GSTR-1, GSTR-3B, the books and the ITR should tie. Purchases should reconcile to 2B monthly, not annually. TDS credits in 26AS should map to income actually booked. That is a bookkeeping cadence, not a heroic year-end exercise — it is precisely what a monthly books-and-MIS retainer exists to produce. Businesses with reconciled monthly books almost never meet the analytics engine; businesses with March-only books meet it on the engine's terms.

If a nudge or intimation has already arrived

Speed and accuracy beat panic. An e-campaign SMS wants feedback or an updated return; a DRC-01B/01C wants a portal reply in 7 days; an ASMT-10 or DRC-01 wants a documented reconciliation. In every case the reply that works is the one built on invoice-level workings — see our DRC-01 case study for what that looks like in practice. What does not work is silence: automated systems escalate on timers.

How we can help

Our retainers are built for the analytics era: monthly 2B reconciliation, GSTR-1/3B/books tie-outs, AIS review before every ITR, and notice handling with a first reply inside 48 hours when something does land. If you have received a mismatch SMS or a portal intimation, send it to us today — the clocks on these are short.

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This article is general information, not tax advice. Systems and thresholds evolve; confirm specifics for your situation before acting.

The tax department runs on AI now: how returns get picked for scrutiny