Tax laws

Everything you need to know about changes to tax laws that will affect you

The Central Council of Direct Taxes (CBDT) recently issued an ordinance requiring various new financial details to be incorporated into Form 26AS under the Income Tax Act 1961. The new information includes details about foreign remittances, purchases like mutual funds, and more.

What is Form 26AS?

Form 26AS is a consolidated annual tax return that contains all taxpayer tax information. For example, previously it mainly reflected the amount of tax deducted or collected at source, self-assessment or withholding tax paid, information about high value transactions, claims and refunds, etc. The list of details has now grown.

“Form 26AS is an essential document because it helps taxpayers verify whether taxes deducted or collected on their behalf have been properly filed with the government. A taxpayer must crosscheck the details of the tax deducted and collected mentioned in Form 26AS to match their taxes, ”says Archit Gupta, founder and CEO of ClearTax, a tax firm. For example, if your employer has deducted part of your salary to the Provident Fund, or if the tax has been withheld at source (TDS), the details can be cross-checked in Form 26AS.

Also last year, significant changes were made to Form 26AS. These included the details of all the high value financial transactions of this exercise.

New Amendments

In the new 26AS form, the following details will start to appear now:

1. Details of any overseas remittance.

2. Salary breakdown of the various components to be declared by employers.

3. Off-market transactions reported by the Custodian / Registrar and Transfer Agent (RTA).

4. Details of mutual fund purchases and dividends received.

5. Interest on repayments from the previous year.

6. Information on other taxpayers in the RTI.

“With the details of overseas remittances in the hands of authorities, taxpayers will need to exercise caution in complying with income tax law and the Foreign Exchange Management Act (FEMA). Previously, off-market transactions were put aside because they were not reported to the department, ”Gupta explains. Thus, the main idea behind these changes is to facilitate voluntary compliance by taxpayers.

Under previous changes, details such as foreign remittances and mutual fund purchases over a certain limit had to be entered if they exceeded a certain limit. “These changes are beneficial for the taxpayer as they can verify the details of the state of specified financial transactions (SFT) reported by different entities. These SFTs will help them remember financial transactions and file their tax return in accordance with Form 26AS, ”said Ruchika Bhagat, Managing Director of accounting firm Neeraj Bhagat & Co.

Experts believe that extending the scope of Form 26AS will simplify RTI filing for taxpayers, as more details will be available in a single return.

“In the new 26AS form, the income tax department will also provide details of outstanding claims. This type of information will help you verify whether the same request is really pending or contested, ”Bhagat explains. If it is a contested request, the error can be rectified, or an appeal or an apology for delay may be filed if the time limit has already expired.

The changes make Form 26AS more comprehensive and place no additional burden on taxpayers who have already disclosed details of their transactions.

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