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ANNUAL INFORMATION SYSTEM

26AS

TAXPAYER INFORMATION SYSTEM

A big step by the Income Tax Department has caused even common people to lose sleep.

The accounts of all types of financial transactions done during the year have been disclosed on the Income Tax Department web portal. This will enable taxpayers to show the transactions they were hiding (mostly share transactions) in their ITRs.

AIS i.e. Annual Information Statement has been released on the Income Tax Department website. It contains information about all kinds of financial transactions of citizens and if someone has filled the income tax return without seeing this information, there is a possibility that it will be wrong. This is because the Income Tax Department is going to verify whether the information in the return matches the information in the AIS while processing the return. Information from AIS has closed most of the tax evasion loopholes.

The data which was previously available in 26 AS has been greatly enhanced in the new AIS and henceforth it will be convenient to fill your returns with a knowledgeable person, along with this it has become necessary to be very careful while doing financial transactions, the financial transactions are done by tax evasion will be reduced due to this.

 What is "explosive" in AIS?

1) Almost 2 crore new demat accounts were opened across the country after covid. Stock markets and mutual funds witnessed huge fluctuations. Information about each of these transactions is entered in the AIS. Since all the information like profit, loss, and dividend is with the Income Tax Department, a return filed without recording can invite notice. You have to file your return only by filling in the details of capital gain or loss, otherwise, you may get a notice for concealing the information.

2) Interest on bank FD was coming in 26 AS. AIS also includes interest on the accompanying savings account. Although there is an income tax exemption on the interest on savings accounts up to 10 thousand, it is mandatory to report it in the return as the interest above 10 thousand is your taxable income. Along with the interest on FD, it is now mandatory to include the savings account interest in your income and pays tax on it as per your income tax slab. That is why it is necessary to show interest in all savings accounts as income.

3) Many online transactions increased after covid. So there is a huge turnover in your bank savings account. This turnover and amount deposited online in the account are recorded in the bank account, this data also goes to the income tax department. Online transactions of more than 10 lakhs on your account have to be accounted for. If the online transaction looks suspicious, the Income Tax Department may ask you for information about who and what the money came from. If you are a businessman, using a current account for online transactions would be appropriate.

4) Information about the purchase and sale of immovable property i.e. flat, plot, shop premises is also given in AIS. In this transaction, if someone has purchased more than the source of income, the Income Tax Department can inquire about it. Filing return recording capital gain in a sale transaction is important as registration of your transaction in AIS can lead to notice of the wrong filing of return without information.

5) Entry in AIS of immovable property transactions also relates to home loans. Because a house is also an immovable property. Some people who save tax by taking a home loan deduction, if they have availed deduction by taking a loan on more than one property, it should be remembered that the record of their properties is with the Income Tax department. Many claim home loan deduction by showing that they live in the borrowed house while filing their returns. If there are two properties, apart from the residential property, if the other property is rented out or vacant, the same must be noted in the return. Some submit their returns by splitting them. They too may find it more costly to do so with information from AIS.

6) If the home loan is taken in the name of both, the same information must be given in the return. While deducting the home loan of the same property, both the partners of the property should keep a record and give their share as per the rules, not only the address of the property but the built-up area is also expected by the Income Tax Department. Based on the information in the AIS, the Income Tax Department can inquire into all this if it deems necessary.

7) Everyone tries to increase their income in various ways. For that, some do business that increases income through commission, and brokerage. As the income of these people is also included in AIS, it is also required to be entered in the return. The return forms are also different for people with such different sources of income. Especially the employees whose basic income is salary should take note of this and be careful. Are we not violating any principle while increasing income? This should also be taken care of.

8) some people invest large sums in finance, financial institutions and credit unions for the extra interest of one and a half to two per cent. In the last 10-12 years, many people are heedless despite having accumulated crores of rupees. Now the government can also ask for data from such institutions for AIS, perhaps in the coming year credit, finance, and post account data will also come in AIS. It is not wrong to give and receive interest on deposits but the government expects you to pay tax on the interest if you report it in your return.

9) Use of checks is mandatory for the amount above 10 thousand while doing financial transactions. But in some places, even big transactions above 10,000 are still done in cash. The Income Tax Department has the right to scrutinize even the returns filed online. Therefore, financial transactions done without rules can become expensive.

10) Many deposit or withdraw more than 50000 in a savings account at a time. Or even if they deposit more than 10 lakh cash in a savings account from time to time in a year, they may get a notice from the income tax department.

The government has made it easy for the income tax department to know any major financial transactions done during the year through AIS. Therefore, transparency in financial transactions will have to increase, it is certain!

So be careful and ensure that all your financial transactions are shown in ITR. This is certainly a bold move by the Income Tax department and it certainly improved every year.

Regards

Santosh Patil

Founder

Alliance Tax Experts

9769201316

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