Form 26AS introduced by the Income Tax Department is popularly known as the Tax Passbook. The new form will have the Statement of Financial Transactions (SFT’s) in various categories to help tax payers recall all their financial transactions that they made, while filing Income Tax Returns.
The new Form 26AS will have the additional details of taxpayer’s high value financial transactions undertaken during a financial year. This is expected to reduce errors by the taxpayers as the details of certain transactions above a threshold will be displayed to the taxpayer in the new form. And would facilitate voluntary compliance and ease of e-filing of IT Returns. The taxpayers can verify if financial transactions are done in line with the income reported in the financial year by looking at the form 26AS before filing the IT Returns.
The changes that have been made in the new form and how it is going help taxpayers in filing an error free ITR are: Form 26AS is an annual credit statement which is issued by the Tax Department. The new form is revised to broaden the coverage of more financial information and will be called the Annual Information Statement (AIS).
Older form 26AS contained details of tax deducted at source (TDS) and Tax collected at Source (TCS) against a permanent account number (PAN) and also contains additional information such as details of other taxes and refunds among other taxes paid. But now the new form will also display information about some of the financial transactions reported by specified persons in specified financial statements filed with the tax department under section 285BA of the Income Tax Act,1961.
Since 2016, The tax department has been receiving information about transactions done by a tax payer above a threshold value filed by entities such as banks, mutual funds, bonds issuers, registrars and sub registrars. These transactions include cash deposit to the saving bank accounts, purchase of shares, mutual funds, sale or purchase of immovable property of worth more than 30 lakhs, credit card payments of 1 lakh in cash etc. There are around 16 such transactions. Now these transactions will be included in the newly introduced part E of the Form 26AS.
The additional information in the new form 26AS will help in reducing errors on account of omission or under-reporting of income in the tax return with which a high value transaction is done. Taxpayers earning income in cash and make certain expenditures and investments without offering such cash income to tax, it may lead to penal action by the government. These cash income and expenditures will now be included in the new form 26AS. Now the taxpayer will be getting the details in the Form26AS, so the chances of not reporting the income are very less.
