CBDT’s new Form 26AS will remind taxpayers to file major financial transactions
The Central Board of Direct Taxes (CBDT) has introduced a new auto-generated ‘Form 26AS’ which will handhold taxpayers while filing their ITRs in a faceless manner from the current assessment year , an official statement said.
The new form has been introduced to ensure that taxpayers will no longer forget to mention major financial transactions such as cash deposits and withdrawals, investments in shares and mutual funds, and property transactions in their annual income-tax returns (ITRs).
Form 26AS is an auto-generated financial statement that includes taxation-related information, including details of high-value transactions. The form earlier used to give limited information related to tax deducted at source (TDS) and tax collected at source (TCS) besides certain additional information including details of other taxes paid, refunds and TDS defaults.
The CBDT explained that the income tax department already receives information such as cash deposit and withdrawal from saving bank accounts, sale and purchase of immovable property, time deposits, credit card payments, purchase of shares, debentures, foreign currency, mutual funds, buy back of shares, cash payment for goods and services as per the Income-Tax Act since 2016.
“Now all such information under different SFTs [Statement of Financial Transactions] will be shown in the Form 26AS,” the statement said.
A finance ministry official requesting anonymity said, the faceless system aims to handhold taxpayers for ease of filing returns. It will also reduce litigations as genuine taxpayers will not miss filing any transaction in their ITRs. Besides, it will nudge such taxpayers who tend to conceal these details to make full disclosures.
Archit Gupta, founder and CEO at ClearTax said the move will provide access to both filers as well as the government to the taxpayer’s complete list of financial transactions. “In the near future, details of financial transactions related to the stock markets may also be included,” he said.
ClearTax is a financial technology platform providing tax and investment-related solutions.
According to Gupta, ‘Form 26AS’ earlier had an Annual Information Report (AIR) of transactions. Now, it will have details of Significant Financial Transaction (SFT). “Taxpayers will have access to details of all SFT filed by specified entities against their PAN (permanent account number),” he said.
CBDT said that the ‘Form 26AS’ for any taxpayer will now display fields such as type of transaction, name of SFT filer, date of transaction, single or joint party transaction, number of parties, amount, mode of payment and remarks.
Gopal Bohra, partner at tax consultancy firm NA Shah Associates LLP said, “The new form will enable the taxpayer to have all important information available while preparing the tax return so that the chances of committing any error will reduce significantly.”
According to Pranjal Kamra, the CEO of legal and financial service firm Finology, the new form has enlarged the scope of reporting to include financial transactions such as sale of shares, redemption of mutual funds and sale of property. “This would not only facilitate reportings but would also desist those taxpayers who inadvertently conceal financial transactions while filing their IT returns.”
“The government is putting all its effort to make the economy transparent and to curb all the illegitimate financial transactions. The introduction of new form 26AS is a massive step forward in this direction,” said Kapil Rana, chartered accountant and founder of HostBooks Ltd, a cloud-based accounting platform.