Soon, the Form 26AS will carry details of your foreign remittances and off-market share transactions executed during the year.
The Central Board of Direct Taxes (CBDT) issued a notification on Wednesday stating that several additional details will now be populated in the annual information statement in Form 26AS. This includes foreign remittances, interest on income tax refund, off-market transactions, dividend income earned through mutual funds and purchase of mutual fund units. “The tax department is trying to populate as much financial data as possible and will then track people who did not pay due taxes on such transactions,” says Karana Batra, Founder, Chartered Club, a tax consultancy firm.
Life to get tougher for tax evaders
For example, if you are an NRI who made profits from the sale of property in India last financial year, but failed to pay capital gains tax, you might have to respond to notices from the income tax department. “Such people cannot escape the tax net now. They will have to explain the reason why taxes were not paid. Honest tax payers, on the other hand, will have all the information in a consolidated format in a single document,” says Sudhir Kaushik, Co-founder and CEO, Taxspanner.com.
Easier process for honest tax-payers
For diligent tax-payers, tax consultants do not foresee any increase in compliance burden. “It would in no way add to the compliance burden of the taxpayers, but would rather facilitate diligent filing of their income tax return,” says Suresh Surana, Founder, RSM India. Before filing annual income tax returns, it is important to verify information in form 26AS, to avoid missing out on reporting any transaction or income to avoid any notices in future due to discrepancies. “Conformance to such notification is required to be done by the DGIT and not the taxpayers and so, it would in no way add to the compliance burden of the taxpayers. By expanding the scope of Form 26AS, taxpayers would be able to access more information pertaining to transactions carried out by them during the year, which could be taken into account for the purpose of filing of tax return,” says Surana.
Maintain record meticulouslyAs the income tax department increases its focus on auto-populating as much data as possible in the statement, the additional information will help tax-payers file accurate returns. If you have followed the due process of paying taxes on all transactions, you need not be concerned with the additional information. However, ensure that you maintain records of all such transactions so that you can respond to notices should you receive any.