BQ Explains: Everything You Want To Know About The New Income Tax Form 26AS

Form 26AS, think income tax, has been revised by the revenue department. The new version of this form will capture certain high-value transactions by taxpayers — individuals, companies, partnership firms, etc.

Essentially, it's an electronic statement that can be accessed by a taxpayer from her account on the Income Tax Department's website. The form will auto-consolidate certain high-value transactions by a taxpayer in a year. Taxpayers won't have to then scramble for this information at the time of filing their tax returns. It will also minimise the risk of a notice from the department due to any error or misrepresentation.

What Information Will Form 26AS Have?

So far, Form 26AS mainly reflected details of tax deducted or collected at source by third parties, along with certain other details.

Budget 2020 widened the scope of information further, making the form more comprehensive. Additionally, the form will be updated more frequently — the tax department will update its contents within three months of receiving the information from third parties like banks, Registrar of Properties, mutual funds, etc. The changes have been notified from the current assessment year, effective June 1.

The revised Form 26AS will include the following details about a taxpayer:

• PAN, email ID and Aadhaar number.
• Date of incorporation if the taxpayer is a company, LLP.
• Information relating to TDS and tax collected at source.
• Information relating to payment of taxes, demand and refund.
• Details of pending as well as completed tax proceedings, if any.
• Details of specified financial transactions.

What Are Specified Financial Transactions?

A taxpayer may enter into many transactions in a year with multiple entities. For instance, she may make fixed deposits in banks or purchase an apartment. Some of these transactions may generally be high value.

Form 26AS will reflect details of the following transactions only if they are beyond the prescribed thresholds.

Transactions with a bank or a cooperative bank

• Payments in cash exceeding Rs 10 lakh or more in a financial year for purchase of bank drafts, pay orders or prepaid instruments.
• Cash deposits or withdrawals worth Rs 50 lakh or more in one or more current accounts.
• Deposits exceeding Rs 10 lakh in non-current accounts.
• One or more time deposits exceeding Rs 10 lakh.

Transactions with a company or institution issuing bonds, debentures or shares

• Receipts exceeding Rs 10 lakh for acquiring bonds, debentures or shares.
• Amount exceeding Rs 10 lakh as a consideration against buyback of shares.

Investments in mutual funds and real estate

• Receipt above Rs 10 lakh for acquiring units of a mutual fund scheme.
• Registrar of Properties must report transactions for an immovable property exceeding Rs 30 lakh.

Is The Department Getting Additional Information?

To be clear, the tax department has been receiving this information from banks, post offices, mutual fund houses, etc., all along. Only now, transactions above a certain threshold will be pre-filled in Form 26AS, and taxpayers will only need to cross-check them at the time of filing their returns. Transactions that fall below the thresholds in any category will need to be entered manually by taxpayers.

Should Tax Payers Be Worried?

According to the tax department, revised Form 26AS will be helpful for honest taxpayers as they will get updated information on financial transactions while filing their returns. Large taxpayers, however, may no longer be able to conceal financial transactions as the information will already be aggregated.

Ameet Patel, partner at Manohar Chowdhry and Associates, said the tax department wants to convey to taxpayers that it is already aware of their high-value transactions. The tax department is likely to pre-fill information in the tax return form based on Form 26AS, and any mismatch may result in queries, he said.

The revisions will speed up tax filing process since all transactions or information will be visible to the authorities and the taxpayers in the same format, Shailesh Kumar, partner at Nangia & Co. LLP, said. The tendency of taxpayers to omit details due to lack of information while filing returns will be minimised, he said.