Before we start, have a look at impact areas:

Effective date : June 01, 2020

Impacting : Every Taxpayer

Rewarding : Honest Taxpayer

Transparency: Wider. You will know what IT Department knows about you.

Introduction:

The Income Tax Department has notified new revamped Form 26AS on May 28, 2020[1]. Old Form 26AS was used to contains information such as Income earned along with taxed deducted thereon, taxes paid, refund received etc.

However, the new revamped form 26AS will, in addition to these, also contain information which the Income Tax Department has obtained from various other sources such as Banking Company, Insurance Company, other listed Company, property registrar, GST department etc.

Income Tax Department was hitherto having this information with it, however, these are not shared with the Taxpayers. These information were used during scrutiny assessment. Now, Taxpayers will also know what all information the department possess about them.

Scope of new Form 26AS

The revised Form 26AS, known as Annual Information Statement contains following information:

1. Information related to income earned/TDS/TDS/taxes paid/refund received/demand raised.

2. Information related to Specified Financial Transactions (refer table below for detailed).

3. Information relating to pending proceedings and completed proceedings.

4. information received under an DTAA agreement

5. Information received from any other person to the extent it may be deemed fit in the interest of the revenue.

Thus, it can be inferred that the department has substantially widened the scope of Form 26AS.

Major Specified Financial Transactions (SFT) which will be reflected in taxpayer’s Form 26AS:

Sr. no. Transaction type Reporting Limit in INR (Aggregate amount in a FY) Reporting Persons
1 Cash payment for purchase of bank drafts 10 lakh or more. Banks
2 Cash deposits or cash withdrawals in current account. 50 lakh or more Banks
3 Cash deposits in one or more accounts (other than a current account and time deposit). 10 lakh or more Banks
4 Time deposits 10 lakh or more Banks
5 Payments made by any person in respect of credit cards issued to that person 1 lakh or more in cash or

10 lakh or more by any other mode

Banks
6 Purchase of debentures or bonds. 10 lakh or more Company or institution
7 Purchase of Shares 10 lakh or more Company
8 Buy back of shares 10 lakh or more Listed Company
9 Purchase of Mutual fund units 10 lakh or more Trustee of MF
10 Purchase of foreign currency 10 lakh or more Authorised person- FEMA
11 Purchase or Sale of immovable property Rs. 30 lakh or more Inspector, Registrar or Sub- Registrar
12 Cash payments for goods or services 2 lakh or more Any person liable for Audit u/s 44AB

Key take away:

1. Presently, only the transactions which attracts 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 but from now onwards all specified financial transactions reefer in above mentioned table shall also be reflected in Form 26AS.

2. The new Form 26AS would help the honest taxpayers with updated financial transactions while filing their returns, whereas it will desist those taxpayers who inadvertently conceal financial transactions in their returns. This is in line with Government of India ‘Honouring the Honest’ policy.

3. Considering this fact, it is always advisable to regularly go through form 26AS so that incorrect entry can be removed in due course by raising the complaint with respective agency.

4. This will help stop the practice of giving incorrect PAN at the time of purchase as now the PAN holder will get to know that the transaction has been done on this PAN.

5. If the taxpayers disclose the transactions reported in Form 26AS appropriately in its ITR, chances of getting the case selected for scrutiny gets reduced.

Our comments:

The government has taken good initiative and it is beneficial for legitimate taxpayers. It is a tax passbook but just like a bank passbook, it could have unintended errors. Information now available at a glance. A taxpayer can verify his actual transactions with the transactions reported in his Form 26AS before filing his ITR.

[1] vide Notification No: 30/2020/F. No. 370142/20/2020-TPL. One can access the notification at

https://taxguru.in/income-tax/cbdt-notifies-form-26as-annual-information-statement.html

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3 Comments

  1. Ashim Paul says:

    Under the above point no 11. Purchase or Sale of immovable property Rs. 30 lakh or more –
    1. What happens when an PARENTAL immovable property say costing about Rs 1,00,00,000 (one crore) is sold by four holders each receiving Rs 25,00,000 (Twenty five lacs) will be reported as 1 crore for each. But will be scrutinised for 1 crore even after paying the taxes.
    2. Under which head the tax is to be paid in the above case.
    3. Where to show this as income (since full share will be income as it is received from parent) in saral.
    Awaiting your earliest reply, if considered to be answered.

    1. DEEPESH RAJ says:

      Thanks for reading, pointwise reply are as under:
      1 26 AS will reflect only 25 lacs in each of the four holders
      2 Capital gains
      3 Capital gain head tab
      Meanwhile you can connect with us for any clarification is required.
      Contact 8470041711
      Thanks, Deepesh

  2. A. Ranganathan says:

    An appeal to the Hon Minister of Finance, Government of India from an 88 year old tax payer
    The recently introduced rule that hereafter dividends will be taxed directly in trhe hands of the investor puts a heavy burden on the Investor Especially Senior Citizens and the super seniors will be hard put to maintaina files, track the divdends received, the deductions made if any etc.etc. The burden of paying at source was introdeuced few years ago ostensibly to lighten the burden on the tax payer and as an inducement for better compliace.
    I dont see how the new rules will avouid double point taxation, But where and how was the double point levy was hapening , I cannot understand.
    Please restore the previous rule of dividends taxable at source and free people like me from the having to caary the extraheavy burden .

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