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Annual Information Statement (AIS) – Income by long-term capital gain (LTCG) from units by an offshore fund u/s 115AB(1)(b)

With its recent roll-out, the Annual Information Statement is currently the latest talk of the town. Due to its comprehensive coverage, it has started creating havoc amongst the taxpayers.

Broadly speaking, the Annual Information Statement is divided into 50 information categories. In the present article, we are going to discuss about one such information category which is ‘Income by long-term capital gain from units by an offshore fund u/s 115AB(1)(b).

Understanding information category ‘Income by long-term capital gain from units by an offshore fund u/s 115AB(1)(b)-

AIS – Income by LTCG from units by an offshore fund

Provisions of section 115AB(1)(b) states as under-

  • Whenever the total income of an assessee (being an overseas financial organization) includes-
  • Income by a long-term capital gain on account of transfer of units purchased in a foreign currency;
  • Then, income tax on such income would be taxable @10%.

TDS provisions attached with the information category-

Tax is deductible as per provisions of section 196B of the Income Tax Act on the income referred under section 115AB(1)(b). According to section 196B, the person responsible for paying such income is required to deduct TDS @10% within earlier of the following times-

  • At the time of payment of income by any mode; or
  • At the time of credit of income.

Source of information for Annual Information Statement-

The person deducting TDS under section 196B is required to file a TDS statement/ return in Form 27Q on a quarterly basis. Additionally, the deductor is also required to issue a TDS certificate in Form 16A to the deductee.

The details provided by the deductor via Form 27Q will be taken as a source of information for the Annual Information Statement under the information category ‘income by long-term capital from units by an offshore fund u/s 115AB(1)(b)’.

Processing of the information category under Annual Information Statement-

Information received from the TDS statement/ return in Form 27Q, as filed by the deductor, will be processed in the Annual Information Statement in the following way-

  • Long-term capital gain earned on account of the transfer of such units will be treated as taxable in the hands of the recipient.
  • In case the information contained in the said information category is not fully correct, the same can be reported by the taxpayer via different feedbacks provided under the Annual Information Statement.
  • Such feedback will be reflected separately in the Annual Information Statement. Accordingly, the value will be updated in Taxpayer Information Summary.

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May 2024