Income Tax return: Did High value transactions or large investments ? New Form 26AS will capture it all

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The form not only reflects the TDS deducted by your employer or bank but also details of various financial transactions.

30 November – Extended due date for filing of income tax returns for the assessment year 2020-21 (the financial year 2019-20) – is just a few weeks away.

Whether it is taken forward once again by the Central Government and the Income Tax Department (I-T) department, it is best to complete this process as soon as possible.

But before starting the return filing process, go through Form 26A to verify the tax deducted from your income. A new format with information on high-value financial transactions this year will be effective from June 1, 2020.

What is the information in Form 26AS?

Your Form 26A shows details of taxes deducted on your behalf. For example, tax payable on your salary is deducted by the employer and deposited with the I-T department every month before payment of your net salary. Your bank deducts tax on your fixed deposit interest before depositing your account at maturity. Also, the tax deposited at source, advance tax, or self-assessment tax that you deposit will be reflected in this statement, in addition to any withdrawal from I-T on the additional tax paid.

How might I access it and use the information in the form?

You can view and download Form 26AS by signing on to www.incometaxindiaefiling.gov.in. If you are not already working with your PAN as your User ID, then you have to register first. You will then find this under the ‘My Account’ tab.

Before you adopt your return filing exercise, make sure that the TDS details in your Form 16, are matching, with information in 26AS on the tax submitted by your employer. “Usually, there will be no difference’’. According to Sandeep Sehgal, Director, Tax and Regulatory, AKM Global, all things considered, if there is, the person will need to contact the employer who has issued Form 16 to fix it or the TDS return filed by the employer. You can also raise a query using the ‘Tax Credit Mismatch’ function under ‘My Account’.

What are the main changes in the form of this assessment year?

For one, it will contain additional personal information such as your Aadhaar, mobile number, date of birth, and email ID. “Reporting in Form 26AS, named as the Annual Information Statement, has been widened. Suresh Surana, founder of RSM India, a tax consultancy firm says, online correspondence and tracking between tax authorities and taxpayers will become more robust with the inclusion of these details.”

More importantly, it will host other details related to your high-value financial transactions and tax proceedings – as well as complete ones. For example, if you have paid more than Rs 1 lakh by cash to clear your credit card bill, then it will appear in Part E of Form 26AS under the description of SFT (Statement of Financial Transactions). If you have used electronic or cheque modes to pay the bill, the limit will be Rs 10 lakh.

For example, cash deposits of more than Rs 10 lakh in savings accounts will be reflected in the statement along with the fixed deposits of more than Rs 10 lakh opened during the financial year.

Stocks and mutual fund transactions of more than Rs 10 lakh will also find a place in this section, as well as purchase or sale of immovable property valued above Rs 30 lakh. Note that the I-T department has access to this information since 2016; Now, it will be displayed in your Form 26AS. According to Surana “The accessibility of such prepared details will empower the taxpayer to easily reconcile and report the data related to the financial transactions correctly.

The scope of SFT may be widened in the future if the Income Tax Department proposes to cast the net wider and this proposal goes through.

How will 26AS new-look form help tax-payers?

Experts said compliance would be more efficient and filing returns would be easier. “Many missed reporting incomes are earned on some investments because the same are not received by them. Aarti Raote, the partner at Deloitte India, says, “It can be avoided if reporting of important transactions is readily available. In some cases, deductors do not deduct any tax, but you have no leeway of not disclosing the same. He said, ‘There can be investments which are exempt and hence no tax is to be taken back. These should be reported as exempt income. If these are beyond the specified limits, it will be easier to report this information to the taxpayers, “she says.

So, the new details will reduce the accuracy of your return. “This is a welcome change for all the individuals who need to file complex returns”. Sehgal said, “This will facilitate accurate calculation of their liability with little or no effort to the information due to easy access to additional details.” It will also help them to verify the details with their records and take steps to obtain misinformation, if any, later rectified rather than landing up with the tax notices.

What are its limitations?

Despite the additional details, you cannot rely on Form 26AS to fool-proof your returns. “Only information exceeding the threshold will be reported. (But) Savings Banks income such as interest and incomes like dividends on which taxes cannot be deducted and will not be a part of Form 26AS. Tax-payers need to be cautious in reporting this income,” explains Raote. In other words, if the fixed income does not form part of the SFT because they have not violated the specified limit, it is up to you to ensure that they get reported in your returns.

Also, tighter scrutiny means that you will need to ensure that your records and documents are to draft a response if you do get a tax notice. Also, strict scrutiny means that you will need to ensure that your records and documents have to be drafted for response upon receipt of the tax notice.

Also, if the threshold is reduced in line with the I-T department’s proposal already cited in the future, the compliance burden will increase because you may need to preserve bills even for low-value transactions.

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