Income Tax is one of the most prevalent and the long standing tax in India accumulating more than 50% of revenue from taxes for the Central Government. Income tax is contributed by corporates as well as individuals. Surprisingly, a mere 2-3% of the individual population in India actually pays income tax. However, over the recent years, these numbers have been increasing rapidly. One of the main reasons is the possession of information with the Income Tax Department gathered through various sources in respect of tax payers. This information acts as a deterrent to avoidance and evasion of tax leading to true disclosures, full compliances and complete payment of taxes.

On account of this information, Income Tax Department has evolved from a revenue department to a repository, making itself a powerful tool for governance in the hands of administration. Advancement in information technology combined with timely amendments in law has enabled to bring in place, a robust and a proactive system for compiling and analysing this information by the Income Tax Department. This information is compiled in an internal departmental report called as the Individual Transaction Statement, prepared for each taxpayer separately and the same is accessible to Income Tax Officer having jurisdiction over that tax payer.

Certain extracts or entries of the Individual Transaction Statement are made available to the tax payers in a separate statement. This is done with the purpose to encourage the voluntary disclosures of transactions by taxpayers and also to avoid litigations post filing of income tax returns. This statement is called the Form 26AS – Annual Information Statement In other words, Form 26AS is a subset of Individual Transaction Statement (‘ITS’). On May 28th 2020, the Income Tax Department modified the Form 26AS completely to include more entries and larger extracts of the Individual Transaction Statement.

Let’s have a look at the information compiled in both the statements.

No
Information reported to Income Tax Department by
Infor-mation related to
Particulars of information shared with Income Tax Department
Infor-mation shared when transaction amount exceeds annually
Compiled in ITS
Disclosed in Form 26AS
From This FY
Till Previous FY
1
Bank
Cash
Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque
10,00,000
×
2
Bank
Cash
Payments made in cash for purchase of pre-paid instruments issued by RBI
10,00,000
√ 
3
Bank
Cash
Cash deposits or cash withdrawals (including through bearer’s cheque) in or from current accounts
50,00,000
×
4
Bank / Post Office
Cash
Cash deposits in saving accounts
10,00,000
√ 
5
Bank/ Post Office / NBFC
Fixed Deposits
Fixed Deposits created(Other than renewals)
10,00,000
×
6
Credit Card issuing Bank
Credit Card
Payment of credit card bills in cash
1,00,000
×
7
Credit Card issuing Bank
Credit Card
Payment of credit card bills through modes other than cash
10,00,000
√ 
√ 
8
Company / Institution
Bonds or Debentures
Purchase of bonds or debentures issued by a company or an institution.
10,00,000
√ 
√ 
9
Company
Shares
Purchase of shares directly issued by the company.
10,00,000
√ 
10
Company
Shares
Buy back of shares from any person (other than the shares bought in open market)
10,00,000
√ 
×
11
Mutual Fund Trust
Mutual Fund
Purchase of units of one or more schemes of a Mutual Fund
10,00,000
√ 
 12
Bank / Authorised Forex Dealer
Foreign Currency
Buying of foreign currency by any person including
i)Credit into foreign exchange card or
ii)Expense through a debit or credit card or
iii)Through issue of travellers cheque
10,00,000
×
13
Registrar or sub-registrar
Immovable Property
Purchase or sale of immovable property
30,00,000
14
Any Person liable to Income Tax Audit
Cash
Receipt of cash for sale of goods or services of any nature
2,00,000
×
15
Bank
Cash
Deposit of Cash Exceeding Rs. 2,00,000/- in a single day
2,00,000
(Single Day)
×
×
16
Bank
Cash and TDS
Withdrawal of cash from Bank – TDS to be deducted @ 2% on amount above the threshold limit
1,00,00,000
×
17
Bank
Interest Income
Interest paid without deducting TDS on account of declaration received in Form 15G and Form 15H  for non-deduction of taxes on that interest income
All Tran sactions reported
18
Deductor of TDS
Services Availed / Salaries paid
Information relating to TDS Deducted and value of services availed / Salaries paid
As per TDS Provisions
√ 
19
Collector of TCS
Goods Sold
Information relating to TCS collected on sale of goods including sale of vehicle
As per TCS Provisions
√ 
20
Registered Trusts/ Institutions
Donations
Complete details about the donations received & eligible for deduction from income (newly introduced)
All Tran sactions reported
√ 
x
21
Income Tax Department
Direct Taxes
Receipt of taxes like Self-Assessed Tax, Advance Tax, Regular Assessment Tax
All Tran sactions reported
√ 
22
Income Tax Department
TDS/TCS
Outstanding Demand of TCS and TDS
All Tran sactions reported
√ 
23
Income Tax Department
Direct Taxes
Information relating to outstanding demands related to income tax
All Tran sactions reported
√ 
x
24
Income Tax Department
Direct Taxes
Amount of Income Tax Refund issued and Interest thereon
All Tran sactions reported
√ 
25
Income Tax Department
Proceedings
Information relating to pending assessment, appeal, penalty proceedings, recovery proceedings, etc.
All Tran sactions reported
√ 
x
26
Income Tax Department
Proceedings
Information relating to completed assessment, appeal, penalty proceedings, recovery proceedings, etc.
All Tra nsactions reported
√ 
x
27
Any Officer or Authority functioning under other Acts
Any information
Information received from any other officer under any other act. Some probable examples are given in entries 28-32
√ 
x
28
Goods and Service Tax Department
Indirect Taxes
Turnover reported in GST Returns
All Tran sactions reported
x
x
29
Customs Department
Import / Export
Details of goods imported/ exported in and outside India
All Tran sactions reported
√ 
x
x
30
Recognised Stock Exchange
Shares
Details of shares purchased or sold by a person
Only when details are sought by Income Tax Department in specific
x
x
31
Immigration Department
Foreign Travel
Details of foreign visits (Was tried by the Income Tax Department in past)
x
x
32
Local Municipal Authority
Business Premises
Details of business premises registered under Shop and Establishment Acts (Was tried by the Income Tax Department in past)
√ 
x
x
33
Any Person
Any information
Information received from any person, to the extent it is deemed fit to disclose
√ 
x
34
Information received from Outside India under DTAA
Foreign transactions and Foreign Taxes
Details of international transactions and foreign taxes paid / credit received
All Tran sactions reported
√ 
x
35
Income Tax Department
Foreign Outward Remittances
Details of Foreign Remittances (Form 15CA/15CB)
All Tran sactions reported
x
x
36
NSDL or CDSL
Demat Account
Details of DEMAT account held
All Tran sactions reported
x
x
37
Recognised Stock Exchange
Trading
Details of Commodities, options or futures traded
All Tran sactions reported
x
x
38
Income Tax Department
Basic Details
E-mail Address, Mobile Number, Date of Birth and Aadhaar Number of the tax payer
All Trans actions reported
x

Individual Transaction Statement is more of an internal document for the Income Tax Department where in the information is compiled from various sources like Annual Information Report (‘AIR’), Central Information Branch (‘CIB’), Online Tax Accounting Systems (OLTAS), etc. AIR’s are the reports filed by entities like banks, registrars, companies, etc. annually pursuant to the income tax rules disclosing the prescribed transactions. On the other hand, CIB gathers the information for Income Tax Department by specifically seeking the required details from various entities for analysis.

By comparing the earlier and the revised scope of Form 26AS from the above table, it can be understood that the relevance of Form 26AS has been increased by many fold through increase in the disclosures and transparencies of information. As information is the basis of decision making, a calculated guess can be made that Form 26AS will now become an indispensable document for the banks while sanctioning loans. Importance of Form 26AS may become similar to credit rating of the borrowers for the banks.

We may anticipate similar steps by the Income Tax Department in the coming years. Thank you.

(This article has been compiled with reference to Section 285BA and Section 285BB of the Income Tax Act, 1961 read with prescribed rules under those sections. The threshold limits are the latest limits and the same may vary for earlier FY’s. Usage of technical and legal jargons has been avoided for better understanding of a layman without diluting the intentions of the provisions.)

Authors :
Chetan Mody, Consultant  I’d – chetan.mody@masd.co.in
Vishal Kothari, Partner    I’d – vishal.kothari@masd.co.in
CA Hardik Patel, Manager  I’d – hardik.patel@masd.co.in
Tags: ,

Author Bio

More Under Income Tax

4 Comments

  1. Ram Babu Vijay says:

    If a fixed deposit on maturity deposited in the account with interest in odd amount and same day fresh deposit is issued of lessor or small bigger amount to get it round of figure. It has to be explained in I T R

    1. MASD & Co. says:

      Interest earned on maturity should be offered to tax in Income tax.
      New FD created in this way is no where to be reported in ITR.
      Though, a better option would be to keep the FD on auto renewal mode compared to taking the credit into the account and then creating a new FD.

  2. PMR Gowrissankar says:

    SIR, IF THERE IS ANY MISMATCH IN THE INFORMATION TO WHOM THE ASSESSEE WILL INFORM? other Wise SCRUTINY WILL BE TAKEN. please CLARIFY

    1. MASD & Co. says:

      First Step is to Contact the filer of the information and request them to rectify the mistake in transactions reported by them. If this is not possible, Login to the TRACES account and file a request for resolution under the category – ‘Transaction details Mismatch’ or under the category ‘Transaction not for my PAN’. There is a separate article on TaxGuru on How to file the Resolution – https://taxguru.in/income-tax/raise-request-resolution-track-traces.html
      Right to rectify the transaction details is with the filer of information and not with the Income Tax Department. So, in case if no outcome is received in the second step, ignore the incorrect transaction in Form 26AS or take the correct effect of the transaction and file the income tax return. If at all, scrutiny comes up, the things done at Step 1 and Step 2 will be helpful.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

November 2020
M T W T F S S
 1
2345678
9101112131415
16171819202122
23242526272829
30