Guide · Costs and taxes · Updated 2026-09-18

Your Annual Information Statement reports what other people filed about you, not what you earned

A trader opens the statement in September, sees a number with eight digits in it next to a category called sale of securities, and reaches one of two wrong conclusions. Either the department believes they earned that amount, which is alarming and false. Or the statement is broken, which is comforting and also false. The number is accurate, it was filed by an entity that was obliged to file it, and it describes something that is not income.

Reconciliation is usually taught as an exercise in making two documents agree. For a trading account it is nothing of the kind, because the two documents were never measuring the same quantity. The work is to be able to explain the distance between them, line by line, from records that existed before the question was asked. This page covers where the entries come from, why a trader's statement is denser than almost anyone else's, what the Summary does to the raw data on its way to prefilling a return, what feedback actually does to an entry, and which of the two statutes now in force governs which year.

A ledger of other people's filings, assembled without asking you

The obligation runs to the reporting entity, not to you. A person who registers, maintains books of account or maintains other documents recording specified financial transactions must file a statement of those transactions with the prescribed income tax authority. That is the whole architecture. Your statement is the assembled output of every such filing that carried your PAN, and you had no involvement in any of them.

The statement itself is presented in two parts. The first carries identifying information: PAN, masked Aadhaar number, name, date of birth or incorporation, mobile number, email address and address. The second carries the substance, in five groups: tax deducted at source and tax collected at source, the statement of financial transaction information, payment of taxes, demand and refund, and a wide residual category of other information covering items such as foreign remittance, receipts reported from other sources and interest on refunds.

Two properties of this design matter more than anything else in it. The first is that the entry point is a third party's record of a transaction, so the value recorded is the transaction value. Nobody in the chain knows what you paid for the holding you sold. The second is that entries arrive independently from independent sources, so the same underlying event can generate more than one entry, which is why a deduplication stage exists at all.

Why a trader's statement is denser than anyone else's

A salaried taxpayer with a savings account and one mutual fund holding has a statement that fits comfortably on a page. A trader's does not, and the reason is structural rather than a matter of scale. Each of the reporting streams below is triggered by activity, and trading is activity by definition.

Three consequences follow from that table and each of them surprises somebody every filing season.

Rotation multiplies the reported figure without multiplying anything real. Sell a holding worth ten lakh and buy it back four times in a year and the depository files four sales totalling forty lakh. The account never held more than ten lakh of that security and the gain might be a few thousand rupees. Turnover in a trading account scales with activity; the reported figure follows it exactly.

The half yearly cadence means the statement is incomplete for most of the year. The depository and registrar statements are filed for the half ending 30 September, due by 31 October, and for the half ending 31 March, due by 30 April. A statement consulted in December therefore reflects one half of the year, and an entry that was missing in December can appear in May without anything having gone wrong.

The derivatives book leaves almost no trace. These streams are built on transfers of securities recorded by a depository and units recorded by a registrar. A futures or options position is a contract settled in cash, so no security is transferred and the depository has nothing to record. The practical result is that the statement can be loud about a small delivery book and silent about a large derivatives book. Silence is not permission. The obligation to report business income does not depend on whether a third party filed anything about it, and the computation of derivatives turnover, which decides audit applicability and access to the presumptive scheme, is entirely your own work.

Two statutes are live at once, and the section numbers moved

Any page on this topic written before April 2026 cites section 285BA and rule 114E without qualification. Those citations are not wrong, but they are no longer complete, and the reason is that the Income-tax Act 2025 came into force on 1 April 2026 and repealed the Income-tax Act 1961. The new Act replaces the previous year and assessment year pairing with a single tax year, being the twelve months from 1 April to 31 March.

In September 2026 that leaves both frameworks operating simultaneously on different periods. The statement being reconciled for the year ended 31 March 2026 was populated by filings made under the older provisions, and the return that reconciles to it is filed under section 139. The statement being populated around you right now, for the year ending 31 March 2027, runs on the newer provisions, and its return will be filed under section 263.

The mechanics did not change with the numbering. The statement is still due on or before 31 May following the financial year in which the transaction was registered or recorded, the penalty for failing to file it is still five hundred rupees for each day of default rising to one thousand rupees a day once a notice has been issued, and the penalty for filing an inaccurate statement is still fifty thousand rupees. What changed is which citation is correct for which period, and a page that gives one without the other cannot be checked.

The depository framework itself was re-notified under the new provisions on 10 September 2026, with a companion notification for registrars and share transfer agents covering mutual fund transactions. Both are issued under section 508(1) read with sub-rule (6) of rule 237, both keep the half yearly cadence, and both state their purpose as facilitating the prefilling of capital gains information in returns. That purpose is worth reading carefully. The data is being collected in order to populate a field. It is not being collected in order to compute a liability.

One thing the renaming does not disturb is how you select the statement. It was always chosen by financial year, and the tax year is that same twelve months, so the selector behaves exactly as before. The confusion is in the citations, not the interface.

What the Summary does to the data on its way to your return

The Taxpayer Information Summary is not a second source of information. It is a derived view of the same entries, aggregated by information category, and it carries two values for each category that are frequently read as though they were one.

The processed value is what remains after deduplication under predefined rules. Where the same underlying event produced more than one entry, which happens routinely when a transaction is visible to more than one reporting entity, the rules collapse them so the category is not inflated by double counting.

The derived value is the processed value after your feedback has been applied. It is the figure the portal uses to prefill the return, which makes it the only number in either document that reaches a filing without a human retyping it.

Reading that table in the right direction settles most reconciliation arguments before they start. The broker statement is the only one of the three that knows what you paid. It is therefore the document the computation is built from, and the other two are used to find what the computation missed.

The bridge, and why it is the only thing worth building

Take a delivery book in which securities with an aggregate sale value of 1,84,60,000 left the demat account across the year. The depository files that figure. It is correct. The cost of acquisition of those same securities was 1,79,20,000, and transfer charges came to 24,000.

The reported figure is roughly thirty six times the gain. Nothing in that ratio is unusual for a delivery book that turns over, and nothing in it is a problem. The problem would be a filer who could not produce the middle two lines.

The fifth line is a detail that catches people who assume every cost is deductible somewhere. Securities transaction tax is expressly disallowed as a deduction in computing capital gains, which is a different treatment from brokerage and exchange charges. It is deductible as a business expense where the activity is business income rather than capital gains, which is one more reason the classification of each book has to be settled before the arithmetic starts.

The sixth line is the one that decides whether the year was understood at all. The derivatives book produced turnover that the statement never saw and a loss worth preserving for set off in later years, and neither fact is discoverable from the statement. A reconciliation that starts from the statement and works outward will never find it.

Feedback is a record you create, not a correction you make

Six feedback options are available on an entry, and each asserts a different thing about it.

That last row is the part most guidance omits, and it changes how the whole mechanism should be used. After feedback is submitted, the statement displays the modified value alongside the reported value. The reported value is unchanged and remains visible. An acknowledgement receipt is generated, confirmation is sent by email and message, the action is logged in the activity history with its own identifier and date, and every piece of feedback other than a plain confirmation can be downloaded as a single consolidated file.

Since May 2024 the statement also shows what happened next. You can see whether the feedback was shared with the source for confirmation, the date it was shared, the date the source responded, and the response itself. The source can accept it fully, accept it partially, or reject it. Only where the source accepts and files a corrected statement does the reported figure itself move, and the history of what was originally reported does not disappear when it does.

Read together, those two facts settle what feedback is for. It is not an eraser. It is a contemporaneous, dated, acknowledged explanation attached to an entry, created at a time when you still had the records to support it, and preserved next to the figure it explains. A filer who submits accurate feedback in September and receives a query eighteen months later is not reconstructing an argument. The argument is already on the file, with a date on it.

The inverse also holds and is worth stating plainly. Careless feedback is equally permanent. Marking an entry as denied because the figure looked unfamiliar, when the transaction was in fact yours, creates a dated assertion that is wrong and that cannot be quietly withdrawn. The correct discipline is to reconcile first from your own records and submit feedback only where you can say precisely what is wrong and why.

The order that makes reconciliation tractable

Most of the difficulty in this exercise comes from starting at the wrong end. The statement is the most visible document, so people begin there and try to explain each entry outward. That order guarantees that anything nobody filed about will be missed, which for a trader is the derivatives book, the largest part of many years.

One. Build the computation from your own records first. Contract notes and the broker ledger. Classify each book before any arithmetic: delivery as capital gains or business income depending on how the activity is conducted, intraday equity as speculative business, derivatives as non speculative business. The classification decides which costs are deductible and which set off rules apply.

Two. Only then open the statement. Its job at this point is narrow and useful: to surface transactions your records missed. An interest credit on a dormant account, a dividend on a holding you had forgotten, a redemption processed by a registrar you no longer deal with.

Three. Explain each category, do not match it. For each information category, write the bridge from the reported value to the figure in your computation. Where they agree, note that. Where they differ, note why, in a line you would be content to read aloud.

Four. Submit feedback only where you can name the defect. Wrong PAN, wrong year, duplicated entry, wrong value with the right one supplied. Not because a figure looked large.

Five. Keep the consolidated feedback file with the year's papers. It is the record of what you said and when you said it, and it is far easier to download in September than to reconstruct later.

Six. Check the statement again after the second half yearly filing lands. Entries genuinely absent in December can appear after 30 April. A reconciliation completed before the second filing is provisional whether or not it is labelled that way.

Where this goes wrong in practice

Treating the reported figure as an allegation of income. It is a transaction value filed by a third party under an obligation that has nothing to do with computing your liability. Responding to it as an accusation produces either a wrong return or an unnecessary panic, sometimes both.

Filing to match the prefill. The prefill comes from the derived value, which comes from the processed value, which comes from gross reported entries. It is a convenience, not a computation. Accepting it without the bridge means offering a figure that no record supports.

Assuming an absent entry means an absent obligation. The most expensive version of this is the derivatives book, which typically generates no reporting at all while generating the turnover figure that decides audit applicability and the loss that needs preserving.

Using feedback as a delete key. The reported value stays. Feedback that cannot be substantiated is a dated statement against interest that will still be there when someone reads the file.

Reconciling once, in the wrong month. The second half yearly filing arrives after 31 March. A reconciliation performed against a statement that is missing half the year will be contradicted by the statement itself.

Quoting a section number without its period. With two statutes live on different twelve month periods, a citation without the year it governs cannot be checked by anyone, including the person who wrote it.

What the statement is actually for

The reporting architecture exists so that the department can see the outline of a taxpayer's financial year without opening an enquiry, and so that routine parts of a return can be prefilled rather than typed. Both purposes are served by gross values, which is why gross values are what it collects. Neither purpose requires it to know what anything cost, which is why it does not.

For a trader that makes the statement a completeness check and nothing more. It cannot tell you what you earned, it cannot compute your turnover, it will not see most of your derivatives activity, and it will present a number that looks alarming for reasons that have nothing to do with you. What it can do is catch the entry your own records missed, which is a genuinely useful function and a modest one.

The document that carries the answer is the one built from contract notes while the year was happening. A trader who maintains that computation as they go opens the statement in September to check for omissions and closes it in ten minutes. A trader who opens it hoping to be told what they earned has asked a document a question it was not built to answer, and will spend the rest of the season reconciling two numbers that were never going to meet.