Starting Monday, the Income Tax Department is going to begin a 11-day e-campaign for taxpayers who have not filed returns or have undertaken undisclosed high-value transactions to voluntarily comply for the financial year 2018-19. For this assessment year, all high-value transactions such as those of mutual funds, credit cards and sale/purchase of immovable property will now be reflected in the Form 26AS for taxpayers, the Central Board of Direct Taxes (CBDT) said on Saturday.
“The objective of the e-campaign is to facilitate taxpayers to validate online their tax/financial transaction information available with the I-T Department, especially for the assessees for FY 2018-19 and promote voluntary compliance, so that they do not get into notice and scrutiny process etc,” the CBDT said in a statement.
The tax department in its data analysis has identified certain taxpayers with high value transactions who have not filed returns for AY 2019-20 (FY 2018-19) and those whose high value transactions do not appear to be in line with their Income Tax Return. The Department will send email/sms to these identified taxpayers to verify the information received from various sources such as Statement of Financial Transactions (SFT), Tax Deduction at Source (TDS), Tax Collection at Source (TCS), foreign remittances as well as information related to GST, exports, imports and transactions in securities, derivatives, commodities, mutual funds.
Greater onus on taxpayers to comply
The tax department will begin an e-campaign for voluntary compliance for non-filers, giving a chance to comply to avoid going through the process of scrutiny and notices. The campaign is part of the tax department’s move towards a more comprehensive compliance process, where a new Form 26AS will have greater disclosures on high-value transactions. Since the details of high-value transactions will now be reflected to the taxpayers in the new form, as against the tax department earlier receiving information from financial institutions and then acting upon it, there would be now a greater onus on taxpayers to comply in a voluntary manner.
Going beyond the details of tax deducted or collected at source, the new Form 26AS will reflect all details provided by banks and financial institutions, which were earlier recorded in their SFTs. The CBDT said such measures will help facilitate tax compliance and accountability.
“…the Department used to receive information like cash deposit/withdrawal from saving bank accounts, sale/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, etc. under Section 285BA of Income-tax Act, 1961 from “specified persons” like banks, mutual funds, institutions issuing bonds and registrars or sub-registrars etc., with regard to individuals having high-value financial transactions since the Financial Year 2016 onwards. Now, all such information under different SFTs will be shown in the new Form 26AS,” it said.
The new format of the form, which was announced in Budget 2020-21, was earlier notified in May. The Budget for 2020-21 had announced the revised Form 26AS giving a more comprehensive profile of the taxpayer going beyond the details of tax collected and deducted at source. In last year’s Budget presented in July, 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.
Tax experts said this targeted campaign seems to be a step before transition towards the new format of Form 26AS. Shailesh Kumar, Partner, Nangia & Co LLP said, “This will be an opportunity for taxpayers to voluntarily declare their transactions to the tax authorities and will also help them to be ready with necessary explanations for tax authorities for the transactions. It is also to be noted that under new format of Form 26AS, which will be applicable for current year onwards, most of this information will be reported in the new Form 26AS only. The new campaign launched by CBDT appears to be a transitional step before implementing the new Form 26AS.”
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