What information does Income Tax Department have about you? Individual Transaction Statements Vis a Vis Form 26AS

MASD & Co. 08 Jun 2020 5,595 Views 4 comments Print Income Tax | Articles

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
No	Information reported to Income Tax Department by	Infor-mation related to			Compiled in ITS	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

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4 Comments

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

Reply

June 10, 2020 at 9:27 am
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

Reply

June 9, 2020 at 11:27 am