Annual Information Statement: What Foreign Directors Must Know

What Is the Annual Information Statement and Why Should Foreign Directors Care?

The Annual Information Statement (AIS) is a comprehensive financial profile that the Indian Income Tax Department maintains for every PAN holder in India. Launched in 2021 and progressively expanded, the AIS now tracks 57 categories of income, transactions, and financial activities across a financial year. For foreign directors sitting on boards of Indian companies, this system has significant compliance implications that are easy to overlook.

Unlike the older Form 26AS (which primarily showed TDS credits), the AIS captures a far broader set of data: salary payments, director sitting fees, dividend income, foreign remittances, securities transactions, and even information reported by banks and financial institutions about your accounts. Every data point in your AIS feeds into the pre-filled income tax return that the department generates for you, and any mismatch between what the AIS shows and what you declare (or fail to declare) in your Indian tax return is an automatic red flag for scrutiny.

If you are a foreign national serving as a director of an Indian private limited company or wholly owned subsidiary, this article explains exactly what the AIS captures about you, how to access it, and what you need to do to stay compliant.

PAN Requirement: The Foundation of AIS Compliance

Before discussing the AIS itself, understand that every foreign director of an Indian company must obtain a Permanent Account Number (PAN). This is not optional. The requirements are clear:

• Mandatory PAN: All directors of Indian companies, including foreign nationals, must have a PAN. This was reinforced by MCA requirements for Director Identification Number (DIN) issuance, which requires PAN linkage.
• Higher TDS without PAN: Under Section 206AA, if a non-resident does not furnish PAN, TDS is deducted at the higher of: the rate prescribed under the Act, the rate under the applicable DTAA, or 20%. This can result in significantly higher tax withholding on your director fees and other payments.
• Penalty for non-compliance: Section 272B prescribes a penalty of INR 10,000 for failure to obtain PAN when required.

Once you have a PAN, the Indian tax system begins tracking your financial footprint in India through the AIS. Every reporting entity (banks, companies, mutual fund houses, stock exchanges) reports data against your PAN, which populates your AIS automatically.

The 57 Categories Tracked in Your AIS

The AIS is divided into two parts:

Part A: General Information

This section displays your PAN, masked Aadhaar number (if linked), name, date of birth, registered mobile number, email address, and address. For foreign directors, the address on record is typically the Indian registered address provided during PAN application.

Part B: Financial Information

This is where the substance lies. Part B tracks information across the following major categories relevant to foreign directors:

The critical point for foreign directors: every payment the Indian company makes to you, every dividend you receive, and every remittance sent to your overseas account is captured in the AIS and cross-referenced against your tax return.

How the AIS Differs from Form 26AS

Many foreign directors are familiar with Form 26AS, the older Tax Credit Statement. Here is how the AIS goes further:

The Taxpayer Information Summary (TIS) is a companion document that shows aggregated, processed values from your AIS data. The TIS values are what get pre-filled into your income tax return. If you file without reviewing the TIS, you risk submitting a return that does not match the department's records.

How to Access Your AIS as a Foreign Director

Foreign directors can access their AIS through the Income Tax e-filing portal:

1. Register on the portal: Visit incometax.gov.in and register using your PAN. You will need an Indian mobile number for OTP verification.
2. Navigate to AIS: After login, go to Services > Annual Information Statement (AIS)
3. Download: You can view the AIS online or download it as a PDF. The PDF password is your PAN (in lowercase) followed by your date of birth in DDMMYYYY format.
4. Review TIS: Also access the Taxpayer Information Summary from the same section to see the processed/derived values the department will use for pre-filling your return.

If you do not have an Indian mobile number, you can authorise your Indian tax advisor or chartered accountant to access the portal on your behalf through the Authorized Representative feature.

Common AIS Issues Foreign Directors Face

Issue 1: Duplicate Reporting

The same transaction may appear multiple times if reported by different entities. For example, director sitting fees may show up under both TDS and salary categories. The TIS attempts to de-duplicate, but manual review is essential.

Issue 2: Incorrect Attribution

Payments meant for the company may sometimes be attributed to the director's PAN, particularly for smaller companies where the director and company accounts are closely linked. This inflates your reported income incorrectly.

Issue 3: Foreign Remittance Mismatches

When the Indian company repatriates dividends or fees to your overseas account, the Form 15CA/15CB data flows into your AIS. If the amount shown does not match your records (due to exchange rate differences, bank charges, or reporting errors), this creates a discrepancy that can trigger queries.

Issue 4: DTAA Benefit Not Reflected

The AIS shows gross amounts and TDS without accounting for DTAA relief. If you claimed treaty benefits for lower withholding tax rates, the AIS may still show the gross amount, creating an apparent mismatch.

How to Submit Feedback on AIS Discrepancies

If you find incorrect, duplicate, or misattributed information in your AIS, you can submit feedback directly through the portal:

1. Log in to the e-filing portal and navigate to AIS
2. Click on the specific transaction you want to dispute
3. Select the appropriate feedback option: "Information is correct," "Information is not fully correct," "Information relates to other PAN/year," "Information is duplicate," or "Information is denied"
4. Provide supporting details and submit

The reporting entity (bank, company, etc.) will be notified of your feedback and asked to confirm or correct the data. The CBDT has mandated that reporting entities must respond to feedback within 3 months of the end of the month in which the feedback was received.

Submitting feedback is not just housekeeping; it is a compliance safeguard. If the AIS shows income you did not earn and you file without addressing the discrepancy, the department may treat the unreported amount as concealed income, attracting penalties under Section 270A of up to 200% of the tax payable on the underreported income.

Tax Return Filing Obligations for Foreign Directors

As a non-resident foreign director, your obligation to file an Indian income tax return depends on your income situation:

• Income exceeding basic exemption limit: If your total Indian-source income (director fees + dividends + interest + any other income) exceeds INR 3,00,000 (the basic exemption limit for AY 2025-26), you must file a return using ITR-2 or ITR-3.
• TDS fully covers tax liability: Even if TDS has been deducted at the correct rate and no additional tax is payable, filing a return is advisable to claim refunds (if TDS was deducted at rates higher than your effective tax rate under DTAA) and to establish a clean compliance record.
• Claiming DTAA relief: To claim treaty benefits, you must file a return and attach the necessary documentation, including a Tax Residency Certificate (TRC) from your home country.

The due date for non-audit cases is July 31 of the assessment year. If the Indian company's accounts are subject to audit (which most foreign-owned companies are), the company's return deadline is October 31, but the director's personal return deadline remains July 31 unless the director personally has audit obligations.

Practical Compliance Checklist for Foreign Directors

Follow this checklist every financial year to stay compliant with AIS and Indian tax requirements:

1. Obtain/renew PAN: Ensure your PAN is active and linked to correct contact details
2. Review AIS quarterly: Check your AIS at least once per quarter (data is updated as reporting entities file their returns)
3. Cross-check TDS certificates: Match Form 16/16A received from the Indian company with the TDS entries in your AIS
4. Submit feedback on discrepancies: Address any incorrect, duplicate, or misattributed entries before the tax filing deadline
5. File Indian income tax return: Even if no tax is payable, file to claim DTAA relief, obtain refunds, and maintain compliance history
6. Retain documentation: Keep Tax Residency Certificates, DTAA working papers, and correspondence with the Indian company for at least 7 years
7. Coordinate with FEMA compliance: Ensure that any remittances from India comply with FEMA regulations and are properly documented through Form 15CA/15CB

Key Takeaways

• The AIS tracks 57 categories of financial data for every PAN holder in India, including foreign directors, far beyond what the older Form 26AS covered
• Every payment from the Indian company to you (fees, salary, dividends) and every outward remittance from India appears in your AIS and must be reconciled with your tax return
• Submit feedback on any AIS discrepancies promptly; unreported mismatches can trigger concealment penalties of up to 200% of the tax on underreported income
• Foreign directors must file Indian income tax returns if their India-source income exceeds INR 3,00,000, and should consider filing even below this threshold to claim DTAA benefits and TDS refunds