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    What is Form 26AS/AIS? Why it is important for filing ITR

    Synopsis

    Form 26AS is a tax passbook containing details of taxes deducted and deposited during the financial year. This tax passbook will be eventually replaced by the Annual Information Statement (AIS). The amended Form 26AS has become a potent tool in the hands of the tax authorities, which is why it is important for a taxpayer to know about information available in it.

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    Form 26AS is an annual statement which has details of the tax credited against the PAN of a taxpayer. This form can be accessed from the Income Tax Department's e-filing portal by a taxpayer using his/her Permanent Account Number (PAN). You can refer to your Form 26AS for details of your income (on which taxes have been deducted) as well as the taxes that have been paid by or on your behalf by the deductor (could be your employer, bank etc.) to the government treasury

    The revised Form 26AS, i.e., one's tax passbook, is effective from June 1, 2020, and contains additional information including information regarding tax demands (if any) against your name. These changes were notified by the government via a notification dated May 28, 2020

    The government had introduced section 285BB in the Income-tax Act, 1961 via Finance Act 2020 and inserted a new Rule, 114- I via a notification dated May 28, 2020, for making changes in Form 26AS

    In its new avatar, the Form 26AS is a potent tool in the hands of the tax authorities, which is why it is important for a taxpayer to know about these changes and ensure that a proper reconciliation is done with the entries appearing in the said form.

    What is new in the Form 26AS
    From an Annual Tax Statement, the new Form has now become an Annual Information Statement (AIS). Though at present both the Form 26AS and AIS are currently available on the portal but the old Form 26AS would be discontinued and replaced by the AIS till the new AIS is validated and completely operational. The old Form contained information only about details of tax deducted at source (TDS) against your PAN, tax collected at source (TCS) on your PAN and details of other taxes paid and income tax refunds. The new AIS has two parts: Part A and Part B.

    Part A of the Form contains general information about the taxpayer against the following fields:
    1. Permanent Account Number
    2. Aadhaar Number
    3. Name
    4. Date of Birth/Incorporation
    5. Mobile number
    6. Email address
    7. Address

    It is important to note that the new Form contains a field for the mobile number and email address of the taxpayer which hitherto was not captured. This indicates the importance of the mobile number and email address in the scheme of things where all correspondence with the tax authorities will be done only through a faceless mechanism.

    Part B of the Form contains the following information:
    1. Information relating to tax deducted or collected at source
    2. Information relating to specified financial transactions (SFT)
    3. Information relating to payment of taxes
    4. Information relating to demand and refund
    5. Information relating to pending proceedings
    6. Information relating to completed proceedings
    7. Any other information in relation to sub-rule (2) of rule 114-I

    Information against point numbers 1, 3 and 4 (except information relating to tax demands) continues to be the same as in the earlier form and therefore the focus of this article is on the information sought to be disclosed in the Form against other items that have been inserted.

    Information relating to specified financial transactions
    Rule 114E of the Rules read with Section 285BA of the Income-tax Act casts an obligation on different categories of persons to report certain financial transactions carried on by a class of persons. Basis this report furnished by different categories of persons mentioned in the Rule, a statement of financial transactions carried out by a person during a particular year will be collated and be a part of the Form 26AS/AIS of the taxpayer.

    Transactions that would now form a part of Form 26AS/AIS are mentioned below:
    1. Payment made in cash for purchase of bank drafts or pay orders or banker's cheque of an amount aggregating to Rs 10 lakh or more in a financial year, payments made in cash aggregating to Rs 10 lakh or more during the financial year for purchase of pre-paid instruments issued by the Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007), and cash deposits or cash withdrawals (including through bearer's cheque) aggregating to Rs 50 lakh or more in a financial year, in or from one or more current account of a person.

    2. Cash deposits aggregating to Rs 10 lakh or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.

    3. One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to Rs 10 lakh or more in a financial year of a person.

    4. Payments made by any person of an amount aggregating to Rs 1 lakh or more in cash; or Rs 10 lakh or more by any other mode, against bills raised in respect of one or more credit cards issued to that person, in a financial year.

    5. Receipt from any person of an amount aggregating to Rs 10 lakh or more in a financial year for acquiring bonds or debentures issued by the company or institution (other than the amount received on account of renewal of the bond or debenture issued by that company).

    6. Receipt from any person of an amount aggregating to Rs 10 lakh or more in a financial year for acquiring shares (including share application money) issued by the company.

    7. Buyback of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to Rs 10 lakh or more in a financial year.

    8. Receipt from any person of an amount aggregating to Rs 10 lakh or more in a financial year for acquiring units of one or more schemes of a mutual fund (other than the amount received on account of transfer from one scheme to another scheme of that mutual fund).

    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 of an amount aggregating to Rs 10 lakh or more during a financial year.

    10. Purchase or sale by any person of immovable property for an amount of Rs 30 lakh or more or valued by the stamp valuation authority referred to in section 50C of the Income-tax Act at Rs 30 lakh or more.

    11. Receipt of cash payment exceeding Rs 2 lakh for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10 of this rule, if any.)

    12. Other specified financial transactions i.e. Capital gains on transfer of listed securities or units of Mutual Funds, Dividend income and Interest income. These items have been inserted w.e.f. 12.03.2021.

    This data is compiled based on the information received by the authorities from various sources such as 'Statement of Financial Transaction or Reportable Account ', Online Tax Accounting System (OLTAS) and the Central Information Branch of the Government of India.

    Additional information to be included in Form 26AS/AIS vide CBDT order u/s 285BB dated 26th October 2021 and read with Rule 114-I

    1. Foreign remittance information reported in Form l5CC
    2. Information in Annexure II of the 24Q TDS Statement of the last quarter
    3. Information in ITR of other taxpayers
    4. Interest on Income Tax Refund
    5. Information in Form 61/61A where PAN could be populated
    6. Off Market Transactions Reported by Depository/ Registrar and Transfer Agent (RTA)
    7. Information about dividend of mutual fund reported by Registrar and Transfer Agent (RTA)
    8. Information about purchase of mutual fund reported by Registrar and Transfer Agent (RTA)

    The Director-General of Systems has been authorised by the Board to upload the aforesaid information in the Form 26AS/AIS of the taxpayer. Form 26AS/AIS thus is going to be the most important document which will have to be looked at while preparing the return of income. With data regarding foreign remittances also being included in the said Form, the department can ascertain any mismatch in terms of declaration filed by the taxpayer at the time of making the remittance and the amount collated in the Form 26AS/AIS.

    Information related to pending and completed proceedings
    A new feature of the Form 26AS/AIS is that information related to all pending and completed proceedings for that particular assessment year will be available at a glance. This information will help the taxpayer to match his records with the data being uploaded by the tax authorities. However, this feature is yet to enable as presently, no such information is reflected in Form 26AS/AIS.

    Other information
    • India has signed agreements with many countries to share/exchange information about tax-payer's income/asset details in other countries. Any such information received by the Indian Government from the Government of a foreign State would be reflected in the Form 26AS/AIS.
    • Information received from any officer, authority or body performing any function under any law would also be reflected in the new version of 26AS.
    • Besides above, the Government has now mandated charitable and scientific research institutions which receive donations or contributions to furnish a statement of such donations or contributions received to the income-tax authority. The same might also be reflected in Form 26AS/AIS.

    How the reporting of this information will help the taxpayer
    A taxpayer can verify his actual transactions with the transactions reported in his Form 26AS/AIS before filing his ITR. This will minimise the errors on account of omission of certain transactions while filing the ITR as this will serve as a ready reckoner. At the same time, it will not be possible to conceal the effect of any such transaction that it may have on the ITR. Any mismatch would result in an enquiry by the tax department.

    It is important to note that while these transactions are perfectly legitimate, the authorities will now be able to verify the amount spent vis-à-vis your income. Let us say a person declares his income as below Rs 5 lakh but his credit card spends are more than Rs 10 lakh. From now, such situations will be apparent from the taxpayer's Form 26AS/AIS.

    Conclusion
    While the CBDT's earlier press release states that "The new Form 26AS is the faceless hand-holding of the taxpayers to e-file their income tax returns quickly and correctly", with the information now available at a glance, the chances of it being misused cannot be ruled out. With these changes, Form 26AS/AIS is going to be even more important as this could be used by banks and other institutions who lend money to taxpayers to do their due diligence.

    (The writer is practising chartered accountant at SCV & Co. LLP)
    ( Originally published on Sep 09, 2020 )
    (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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