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 includingi)Credit into foreign exchange card orii)Expense through a debit or credit card oriii)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.)
Author Bio
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
SIR, IF THERE IS ANY MISMATCH IN THE INFORMATION TO WHOM THE ASSESSEE WILL INFORM? other Wise SCRUTINY WILL BE TAKEN. please CLARIFY