- Entities including financial institutions such as banks, mutual fund houses, registrars, bond issuers etc are required to report transactions beyond a specified limit undertaken by a person in a financial year to the tax department
While filing tax returns it is important to check the details mentioned in Form 26AS. Also known as an annual information statement, form 26AS carries the details of tax deducted at source (TDS), refunds claimed etc against a permanent account number (PAN). You need to verify the details mentioned in Form 26AS with the TDS certificate you have to ensure details are correct before filing the tax return. The new notified form 26AS will not only contain the above mentioned details but will also display some of the high value transactions undertaken by a taxpayer during the financial year.
These transactions are known as specified financial transactions (SFTs). Certain entities including financial institutions such as banks, mutual fund houses, registrars, bond issuers etc are required to report transactions beyond a specified limit in the financial year to the tax department.
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These transactions include cash deposit to saving bank accounts, purchase of shares, debentures, mutual funds, buyback of shares worth more than ₹10 lakh on an aggregate basis during a financial year, sale or purchase of immovable property worth more than ₹30 lakh, credit card payments of ₹1 lakh or more in cash or in any mode of ₹10 lakh or more during a financial year. There are around 16 such transactions. Now, these transactions will be displayed under the newly introduced Part E of Form 26AS.
Form 26AS basically provides details or information that the tax department has about transactions done by you during the year. In case you see a wrong entry it needs to be corrected.
“The taxpayer should approach and communicate this in writing to concerned SFT reporting entities, with a request to make necessary corrections. Even if the reporting entity does not change, this can be shown as a valid explanation by the taxpayer to tax authorities in case of any query,” said Shailesh Kumar, Partner, Nangia & Co LLP.
However, at times one may face problem in getting the SFT entry corrected.
“Practically most entities are not responsive to any such requests. We have faced issues with public sector banks that have made wrong STF filing even when the assessee claims that he has never even opened an account with them. They refused to even entertain the assessee,” said Swar Pathak, a Ludhiana based chartered accountant.
In such scenarios we advise the assessee to file their income tax return even if their income is below the maximum amount not chargeable to tax limit,” siad Pathak.
In case the return is not filed the chances of getting an income tax notice goes up, he added.
The other option with the taxpayer is to leave it as it and clarify it when the tax department sends notice, added Patahk.
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