Income Tax

New Form 26AS expanded to include more information

New Form 26AS expanded

Recently the income tax department expanded the scope of information which needs to be reported in the new form 26AS. The CBDT issued an order on 26th October 2021, authorizing the Director-General of Income Tax to upload the information of other sources of high value transactions. The tax department expanded the list of high-value financial transactions that will be available to taxpayers in Form 26AS by including the details of mutual fund purchases, foreign remittances etc.

 What is Form 26AS?

Form 26AS is an annual consolidated tax statement which can be availed from the website of the income tax department by taxpayers with their PAN. It is an important document during tax filing.

Inclusions in New form 26AS

The annual information statement (26AS), will now include the following features as well:

  • Foreign remittance made by any person via authorized dealer;
  • Salary breakup with deductions claimed by employee;
  • Information in ITR of other taxpayers;
  • Interest on income tax refund;
  • Information published in Statement of Financial Transactions;
  • Depository/Registrar and Transfer Agent reported for off-market transactions;
  • Dividends received from mutual funds reported by RTA;
  • RTA reported information on mutual fund purchases.

The new form 26AS will include information about foreign remittances made by the taxpayer, which the authorized dealer shall report in Form 15CC. Further, it will include information about off-market transactions reported by the Depository/Registrar and Transfer Agent, details of mutual fund purchases and dividends received from mutual funds reported by RTA.

Apart from this, details of salary components and allowances and deductions claimed from the employee will also be reflected in the Form 26AS. Further, the tax department[1] has asked to upload information in ITR of other taxpayers and interest on an income tax refund to be reflected in Form 26AS.

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The information uploaded will be reflected in taxpayers’ Form 26AS, which can be accessed from the registered e-filing account of the taxpayer on the income tax portal.

In Budget 2020, a new provision was introduced in the Income Tax Act that mandated it to cover information in Form 26AS. This provision specifies information related to specified financial transactions, pending or completed proceedings, outstanding demands or refunds due or other information obtained from officers under other law. The income tax department later notified about the revised form 26AS, including information on high-value financial transactions undertaken in a financial year.

Now the tax department has expanded the list of high value transactions. Currently, Information of high-value transactions is reflected under Part E-Details of specified financial transactions of form 26AS.

Objective

The objective of this move is to ensure voluntary compliance by taxpayers. The taxpayers can identify incorrect information reflected in Form 26AS and take corrective action. Moreover, the tax authorities can compare the information reported by taxpayer in ITR with the information available in Form 26AS and identify mismatch, if any.

New Form 26AS: Expert’s view

Om Rajpurohit (AMRG and Associates) stated that the additional information to be loaded on the annual information statement (Form 26AS) will ensure ease of faceless digital assessments.

Nangia and Co LLP Partner Shailesh Kumar stated that the new reporting in Form 26AS will allow both taxpayers and tax authorities to assess the profile of taxpayer and with all the information at one place, it will help tax authorities doing e-assessment, and taxpayers will be able to compare information available in Form 26AS with the information reported by the taxpayer in ITR. In case there is a mismatch, it can be flagged quickly.

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Sandeep Sehgal, AKM Global, Director- Tax and Regulatory, commented that in the last few years this form has gotten more comprehensive in respect of information available for taxpayer about the taxes withheld and other financial information. He further said that the idea to make this a go-to document for taxpayers to have everything at a place from basic tax deduction to other details is to meet compliance requirements in a hassle-free manner.

Conclusion

The Income Tax Department will now provide complete details of taxpayers’ financial transactions, like foreign remittances, purchase and receipt of dividends on mutual funds, and other off-market transactions reported by depositories in Form 26AS, with an objective to prevent information suppression by taxpayers. The reporting in new Form 26AS will allow taxpayers as well as tax authorities to assess the profile of taxpayer and bring better flow of information between taxpayer and the tax authorities. The previous Form 26AS provided information about the tax deducted at source and tax collected at source, besides other details like information on other taxes paid, refunds and TDS defaults. Now it has SFTs to assist taxpayers recall all their major financial transactions so that they have a ready reckoner to help them while filing ITR.

Read our article:All about Income Tax Intimation Notice after ITR Filing

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