An end to the ignorance of taxpayers and tightening the noose on tax evaders as the Income Tax department announces the new format of Form 26AS. The income tax department has now made it mandatory to procure information related to capital gains / losses, dividend income as well as interest on Post Office deposits and deposits in Non Banking Financial Companies (NBFCs).
Earlier, the Income Tax department used to take information related to income from salary, interest on bank fixed deposit (Bank FD) and taxes paid from the respective sources.
“Currently, the Income Tax return forms enables the taxpayers to auto populate details such as Personal Details including Name, PAN, Address, Bank Details, Tax payment and TDS details, etc. In the Budget 2021 proposals, the Finance Minister announced the pre-filling of Income Tax returns with respect to the details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. for the purpose of easing the procedure of return filing,” - Dr. Suresh Surana, founder, RSM India.
Tax payers avoided revealing information of capital gain\loss for the following reasons:
- sheer ignorance
- avoiding trouble of calculating the gains / losses
- fear of filing more complicated ITR form than the ITR-1
- supress the information to avoid paying higher tax
This will ease the work of the ignorant taxpayers and will make tough for the tax evaders to skip these details.
In accordance with the said Notification, the category of persons required to report such transactions are as follows:
Capital gains on transfer of listed securities or units of Mutual Funds
- Recognised Stock Exchange such as BSE, NSE, etc.
- Depository defined Depositories Act, 1996
- Recognised Clearing Corporation
- Registrar to an issue and share transfer agent registered under SEBI
- Company distributing such dividend
- A banking company or a co-operative bank covered under the Banking Laws
- Post Master General defined under the Indian Post Office Act, 1898
- Non-banking financial company which holds a certificate of registration under the RBI Act, 1934
Due to the data analytics used by the Income Tax department, any tax evasion advertently or inadvertently will be more closely scrutinised.