CBDT Notifies New Annual Information Statement (AIS) to replace Form 26AS to report TDS, Foreign Tax Credit, and more
CBDT Notifies New Annual Information Statement (AIS) to replace Form 26AS to report TDS, Foreign Tax Credit, and more: CBDT has notified vide Notification No. 30/2020 dated 28.05.2020 the new Annual Information Statement (AIS) under section 285BB by inserting a new Rule 114-I in the Income Tax Rules, 1962 to replace age-old Form 26AS notified under Rule 31AB. The New Annual Information Statement (AIS) will be effective from 01.06.2020 and from that date the old Form 26AS will become obsolete.
The Finance Act 2020 has inserted a new section 285BB regarding Annual Information Statement, in order to expand the scope of Form 26AS beyond the information related to taxpayers tax deducted and tax collected.
Form 26AS was introduced under section 203AA to report the TDS and TCS of the taxpayer.
Section 203AA of the Act, inter-alia, requires the prescribed income-tax authority or the person authorised by such authority referred to in sub-section (3) of section 200, to prepare and deliver a statement in Form 26AS to every person from whose income, the tax has been deducted or in respect of whose income the tax has been paid specifying the amount of tax deducted or paid.
The Form 26AS as prescribed in the Rules, inter-alia, contains the information about tax collected or deducted at source. However, with the advancement in technology and enhancement in the capacity of system, multiple information in respect of a person such as sale/purchase of immovable property, share transactions etc. are being captured or proposed to be captured. In future, it is envisaged that in order to facilitate compliance, this information will be provided to the assessee by uploading the same in the registered account of the assessee on the designated portal of the Income-tax Department, so that the same can be used by the assessee for filing of the return of income and calculating his correct tax liability.
As the mandate of Form 26AS would be required to be extended beyond the information about tax deducted, a new section 285BB is introduced in the Income Tax Act, 1961 regarding Annual Information Statement or AIS.
This section mandates the prescribed income-tax authority or the person authorised by such authority to upload in the registered account of the assessee a statement in such form and manner and setting forth such information, which is in the possession of an income-tax authority, and within such time, as may be prescribed.
Consequently, section 203AA is deleted from the statute from 1st June, 2020.
While presenting the Union Budget for 2019 on 5th July, 2019, the Finance Minister told that pre-filled tax returns will be made available to taxpayers which will contain details of salary income, capital gains from securities, bank interests, and dividends, etc. and tax deductions. Information regarding these incomes will be collected from the concerned sources such as Banks, Stock exchanges, mutual funds, EPFO, State Registration Departments, etc.
Further, section 80G and section 35 mandates a charitable or scientific research institution which receives donation or contribution are also required to furnish a statement of donations or contributions received to the income-tax authority and the same will be reflected in the Annual Information Statement.
For the execution of the same, an amendment is brought in the Income Tax Act, 1961 by introducing section 285BB and Rule 114-I in the Income Tax Rules, 1962.
Section 285BB of the Income Tax Act, 1961 on Annual Information Statement reads as follows-
The prescribed income-tax authority or the person authorised by such authority shall upload in the registered account of the assessee an annual information statement in such form and manner, within such time and alongwith such information, which is in the possession of an income-tax authority, as may be prescribed.
Explanation.––For the purposes of this section, “registered account” means the electronic filing account registered by the assessee in designated portal, that is, the web portal designated as such by the prescribed income-tax authority or the person authorised by such authority.
With the introduction of section 285BB, the old Form 26AS will no longer be available and will be replaced by a more comprehensive Annual Information Statement or AIS. This will curb tax evasion, promote transparency and simplify the tax system and the return filing process.
Annual Information Statement or AIS is more comprehensive than the Form 26AS as it will contain more information about financial transactions of taxpayers beyond the TDS and TCS transactions. Presently, only the transactions which suffer TDS or TCS are reported by the deductor and the same gets reflected in Form 26AS. Those financial transactions on which no tax is deducted are not reported in the Form 26AS except those cases for which Form 15G or Form 15H or lower TDS certificate under section 197 are furnished.
The new and comprehensive Annual Information Statement or AIS has now been notified by the CBDT by Notification No. 30/2020 dated 28.05.2020.