To achieve the dream of  $5 Trillion Economy by 2024 , Finance Minister present its 1st budget of this Decade with substantial changes in Direct Taxes, policy for leveraging of technology, Infrastructure development projects.

One of such changes is ,omission of existing and  introduction, of below specified section`s under Income Tax Act:-

1. This Union budget omitted Section 203AA of the Income-tax Act with effect from the 1st day of June, 2020. and,

2. Introduction of  section 285BB of the Income-tax Act with effect from the 1st day of June, 2020,which specified as follow:-

  •  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 (AIS) 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.
  • 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.

Decoding of Omission and Insertion of section:-

SECTION 203AA :-The prescribed income-tax authority or the person authorised by such authority referred to in sub-section (3) of section 200, shall, within the prescribed time after the end of each financial year beginning on or after the 1st day of April, 2008 prepare and deliver to every person from whose income the tax has been deducted or in respect of whose income the tax has been paid a statement in the prescribed form specifying the amount of tax deducted or paid and such other particulars as may be prescribed.

Prescribed Authority for this section: The Director General of Income-tax (Systems)

Prescribed Time: By the 31st July following FY in which TAX deducted, collected or paid

As per Rule 31AB :-The Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems)] shall deliver,—

(i)  to every person from whose income the tax has been deducted(TDS); or

(ii) to the buyer referred to in sub-section (1) or, as the case may be, to the licencee or lessee referred to in sub-section (1C) of section 206C from whom the amount has been collected (TCS); or

(iii) to every person in respect of whose income the tax has been paid (Self assessment tax or Advance Tax,

[a statement referred to in section 203AA or the second proviso to sub-section (5) of section 206C, in Form No. 26AS by the 31st July] following the financial year during which taxes were deducted or collected or paid.]

FORM no. 26AS is prescribed for section 203AA and second proviso to section 206C(5) and rule 31AB,

1. where ,PART A, shows the details of Tax Deducted at Sources during FY along with details of deductor, date of deduction, amount paid/ credited, tax deducted,deposited.

2. PART B, shows the details of Tax Collected at Source during FY along with details of Seller, TAN of seller, date of collection, amount paid/ credited, tax collected, deposited.

3. PART C, Details of tax paid (other than TDS or TCS): it includes Self Assessment tax,Regular tax deposited by the taxpayers, details of refund received by the taxpayer.

Insertion of new section:-

Sec285BB:- Now this new section required to upload in registered account of the assesse an Annual Information Statement(AIS) Income tax Authorities 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.

Registered Account:- 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. This is TRACES LOGIN OF TAXPAYER.

Annual Information Statement(AIS):- It required to give the details of all the information related to particular taxpayer, Available with Income tax Authorities,  to taxpayer in format as prescribed by the government. (Format is not prescribed yet).

Information Available with Income Tax Authorities:-

Section 285BA of the Income Tax requires specified reporting persons to furnish statement of financial transaction. Rule 114E of the Income Tax Rules, 1962 specifies that the statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in Form No. 61A. As you all are aware that Budget 2019 widens scope of Statement of Financial Transactions (SFT).

Nature of transactions alongwith its monetary value required to be reported under SFT

SI   No Nature of transaction alongwith respective reporting person Value of transaction
1 Cash payment purchase of bank drafts or pay orders or banker’s cheque reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies Aggregating to Rs 10 lakh or more in a FY
Cash payments for purchase of pre-paid instruments issued by Reserve Bank of India and reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies Aggregating to Rs 10 lakh or more during the FY
Cash deposits or Cash withdrawals (including through bearer’s cheque) in one or more current account of a person reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies Aggregating to Rs 50 lakh  or more in a FY
2 Cash deposits in one or more accounts other than a current account and time deposit of a person reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies or by Post Master General Aggregating to Rs 10 lakh or more in a FY
3 One or more time deposits (other than renewed time deposit of another time deposit) of a person reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies or by Post Master General or by Nidhi companies or By NBFCs Aggregating to Rs 10 lakh or more in a FY
4 Credit card payments made by any person either in cash or by any other mode in a Financial Year reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies or any other company or institution issuing credit card Aggregating to Rs 1 lakh or more in cash or Rs 10 lakh or more by any other mode in a FY
5 Receipt from any person for acquiring bonds or debentures issued by the company or institution (other than renewal of the bond or debenture issued) reported by A company or institution issuing bonds or debentures Aggregating to Rs 10 lakh or more in a FY
6 Receipt from any person for acquiring shares (including share application money) issued by the company and Reported by a company issuing shares Aggregating to Rs 10 lakh  or more in a FY
7 Buyback of shares from any person (other than the shares bought in the open market) reported by a company listed on a recognised stock exchange purchasing its own securities Aggregating to Rs 10 lakh  or more in a FY
8 Receipt from any person for acquiring units of one or more schemes of a Mutual Fund (other than transfer from one scheme to another of that Mutual Fund) reported by A trustee of a Mutual Fund or such other person managing the affairs of the Mutual Fund as may be duly authorised by the trustee in this behalf Aggregating to Rs 10 lakh or more in a FY
9 Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through issue of travellers cheque or draft or any other instrument reported by Authorised person as referred to in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 Aggregating to Rs 10 lakh or more during a FY
10 Purchase or sale of immovable property by any person reported by Inspector-General appointed under section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act. An amount of thirty lakh rupees or more or valued by the stamp valuation authority referred to in section 50C of the Act at thirty lakh rupees or more
11 Receipt of Cash payment for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10) reported by any person who is liable for audit under section 44AB of the Act Exceeding Rs 2 lakh

CRUX:-

“Such statement will also include other financial information such as sale or purchase of immovable property and shares in possession of the income-tax authority. Consequently, Section 203AA will be deleted and Form 26AS will be replaced by the comprehensive annual information statement,” the Finance Bill’s provisions relating to direct taxes notes. This proposed amendment will be effective from June 1, 2020 and the form and manner of the annual information statement will be prescribed by the government later separately.

In last year’s Budget, finance minister Nirmala Sitharaman had said that pre-filled ITRs will be made available to taxpayers which will contain details of salary income, capital gains from securities, bank interests, dividends, etc., and tax deductions that will make the filing of accurate tax returns simple. Information regarding incomes and TDS will be collected from banks, stock exchanges, mutual funds, EPFO, state registration departments, etc.

At present, taxpayers use online portal for tax filings, wherein personal details, Aadhaar number, bank account number and tax-paid information are pre-populated in the tax form. In fact, ITR-1 comes pre-filled with information related to the taxpayer and employer, break-up of the salary into taxable component and TDS through Form 16. While the electronic form gets automatically populated with tax liability on fixed deposit interest as the bank deducts TDS, an assessee has to fill interest earned on saving account in the ITR as there is no TDS on the same. They also have to calculate long-term and short-term capital gains on sale of stocks, mutual funds and bonds.

In her budget speech Finance Minister has specified “I am mindful of presenting this budget in the backdrop of two crosscutting developments:

a)Proliferation of technologies, specially analytics, machine learning, robotics, bio-informatics and Artificial Intelligence; and

b)The number of people in the productive age group i.e. 15-65 years in India, being at its highest.

Along with that he weighted on quantum computing, Big Data Analytics. All this steps lead to more Accuracy of Tax  liability of taxpayers, evasion of taxes, and ultimately lead to increase in Governmental Revenue.

We know where  are required to submit Aadhaar every where from opening of bank account to registering of property. And this will work as primary key to the government to have the birds eye view on  Tax Evader in country.

But it helps genuine taxpayer to get all the details of Taxable Income in there ITR automatically (what we called it as Pre-Filled FORM) and lead to better Tax compliance’s.

Author can be reached at manishkalwani1996@gmail.com

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