Background
- The Income Tax Act (the Act) requires the Income Tax Authority to prepare and deliver a statement in Form 26AS, which is primarily a tax credit statement containing details of various taxes deducted from the income of taxpayers. Frequency and manner of furnishing the statement of the financial transaction to be specified.
- The Budget 2020 extended the mandate of Form 26AS beyond the information about tax deducted/ collected. Consequently, the Central Board of Direct Taxes (CBDT), in May 2020, notified the revamped ‘Form 26ASAnnual Information Statement (AIS)’, which contained more comprehensive information regarding taxes paid by a taxpayer, details of pending/ completed income tax proceedings, status of income tax demand and refund along with details of specified financial transactions undertaken by taxpayer during a financial year (such as share purchase, property purchase), etc.
Impact of Provisions
- Form 26AS, in its revamped form, will provide additional information to the taxpayers, which is already being captured by the Income Tax Authority from authorised dealers, registrar, depositories, other persons’ Income Tax Returns etc.
- Benefits to taxpayers: The comprehensive information made available in the new form shall help taxpayers in identifying and taking corrective action, in case any incorrect information/ detail is reported. It shall also accelerate the tax filing process, as reportable transactions shall be made available at one place. Moreover, it shall also minimise the incidence of incongruity between income and expense, which is a prime reason for scrutiny assessment.
- Benefits to tax authority: It shall assist tax authorities in doing e-assessments, having no/ limited interaction with taxpayers, as tax authorities will be able to easily compare information available in Form 26AS vis-a-vis information reported by taxpayer in ITR and any mismatch may be easily flagged by the systems to tax authorities.