New Form 26AS- Now a Financial Transaction Guide

Background

Form 26AS is a consolidated annual tax statement that earlier included information on tax deducted/collected at source, advance tax, self-assessment that was available on the Income Tax website against a taxpayer’s Permanent Account Number (PAN) and was known as the tax credit statement.

With the advent of digitisation and technology playing a vital role in economic development, the tax laws and rules are changing rapidly in order to create a platform wherein taxpayers as well as the tax authorities somehow assist each other in doing their duties well and in line with the prescribed rules.

Enlarging the scope

The scope of Form 26AS has been enlarged by the Finance Act, 2020. This has led to omission of Section 203AA and insertion of Section 285BB in line with new Rule 114-H thereby omitting Rule 31AB to notify the new form 26AS vide CBDT Notification No 30/2020 dated 28^th May 2020.  This enlarged statement in form of 26AS will now not only assist the tax payers in knowing their tax deduction and collection details but also be a complete guide to the financial transactions incurred during the year. It is introduced with a motive of creating a more informative and a comprehensive guide for a taxpayer.

The new form 26AS i.e. Annual Information Statement is expected to benefit the tax authorities and tax payers in the following ways-

• Ease return filing process
• Eliminate tax evasion
• Creating a transparent system

The format has been considered for replacement so that taxpayers can be provided with a complete profile that can ease the tax filing procedures and act as a summary for financial transactions incurred during the year. On the other hand the tax payers who file returns with an intention to conceal transactions and information from the tax authorities, can now not be able to do so. It will be very difficult to hide transactions of high value and other details pertaining to financial transactions.

Important Inclusions

The updated Form 26AS is said to be a step forward towards creating a hassle free and a more transparent mechanism in the Indian Taxation laws. The enlarged scope can be pointed down as under-

• Communication/Profile details in form of Aadhar Number in Part A
• Details of proceedings in form of Inclusion of both pending and completed proceedings
• Details of Income Tax Demand & Refund
• Summary of Specified Financial Transactions- Inclusion of Financial Transactions is in form of Cash/Credit Card Transactions, Investment Transactions (immovable properties, acquisition of shares, buy back of shares), and Foreign Currency Transactions.

The most vital inclusion of above is – financial transactions appearing in the Form 26AS. It will populated out of those as uploaded in the registered account of the assessee by the prescribed authorities who are responsible to upload the same as per Rule 114E in the nature of Specified Financial Transactions. Thus the tax authorities can now ensure that the returns filed by the tax payers are in line with the reported financial transactions as appearing in the Form 26AS leaving no room for concealment and mismatch among the same.

Format notified

The updated format as notified vide CBDT Notification No 30/2020 dated 28^th May 2020 is as under-

Part A

Part B

Therefore, from being only a Tax Credit Statement to being an Annual Information Statement, the new Form 26AS has been introduced with a motive to allow tax payers a hassle free return filing with validated data and shall be taken as a welcoming move by the Government.