Prime Minister Narendra Modi launched a transparent taxation platform on 13 August 2020. Announced reforms to simplify tax compliance, faceless assessment, and filing returns. When the whole system is changing, the central government has proposed to reduce the transaction limit in tax disclosure. To increase the income tax base and prevent tax evasion.
Corona has shaken the entire economy. Because of this, the government has kept the last date for filing income tax returns this year in November instead of July. In June 2020, the notification was issued saying that Form 26AS would now include more information.
First of all, what is Form 26AS?
Form 26AS is an annual tax credit statement. The taxpayer can download the taxpayer from his account on the Income Tax portal. It contains information about tax deducted on your income.
Also, tax collected by you from the tax collector, advance tax paid, self-assessment tax payment, regular assessment tax, refunds received by you in the financial year as well as high-value transactions in respect of shares, mutual funds, etc. Detail is done.
Currently, the Income Tax Department is informed only on the purchase of property worth more than Rs 30 lakhs, shares above Rs 10 lakhs, mutual funds, demat, credit card payments, and fixed deposits.
What is going to change in Form 26AS?
This form will now become the complete profile of the taxpayer. In this, his mobile number and passport number will also be recorded. In this, the details of the expenses to be made for many white goods leaflets, including hotel bills of more than 20 thousand rupees will be revealed. So that when you file the return, you know what and how much you have spent in the past year.
What will change with the changes made in Form 26AS?
Sachin Awasthi, Partner in Tax-Met Consultancy, says that since June 2020, Form 26AS is no longer a form to be filled once a year. This is a live form that will be updated throughout the year.
This will give a complete profile of any taxpayer. CBDT has allowed DG Systems or any other officer to upload it. That is, orders passed in cases like custom, GST, Benami law will also be updated on this. This information will be available not only to the taxpayer but also to the Income Tax Department.
This will make it difficult for every taxpayer to hide information related to any law or tax demand, tax disputes from any bank / financial institution/authority. It will be mandatory for everyone to mention the passport number.
Why look at Form 26AS before submitting ITR?
There are many such information about taxpayer transactions and payments, which reach the Income Tax Department from different sources. All this information will now also be in front of the taxpayer through Form 26AS.
This will increase compliance and make it easier for the taxpayer to file returns. Mistakes will be reduced and litigation will reduce, creating an atmosphere of trust between the taxpayer and the tax department.
Scrutiny of tax returns and the time taken in this process often leads to uncertainty for the taxpayer. This new system will bring overall transparency and accountability to the tax administration.
Changes in Form 26AS will become two targets with one arrow. The updated information will help the honest taxpayer to file accurate ITR. At the same time, people will also avoid hiding information about any particular financial transaction.
How would you benefit from viewing Form 26AS?
Since June 2020, many tax-payers have started receiving notices. They are being asked whether they have done high-value transactions or not. If you answer yes or no, it is cross-verified in the income tax return.
However, the person can have three options in it. Information is correct, incorrect or duplicate. If you do not answer the question as it is, then the department verifies the company who gave that information. If you get wrong then you will have to revise your income tax return.
What is the relationship between the new taxpayer charter and these proposals?
Indeed, the Taxpayer Charter emphasizes one thing. That is, the department will consider you as honest. If you will file a return without mentioning the transaction entered in Form 26AS, then the Income Tax Department will capture it with the help of tools like Artificial Intelligence (AI) and Machine Learning (ML). Then the department will also get a chance to act on you.
Is there any proposal to increase the tax net?
According to the new proposal of the government, if there is a transaction of more than 30 lakh rupees from your bank account, then you will have to file a tax return. Regardless of whether or not any of your transactions have been reported to income tax.
Apart from this, it is necessary to file a return for professionals and businesses whose annual turnover is more than Rs 50 lakh or if the rent is going to exceed Rs 40 thousand.
What if you didn't file ITR?
According to the current law, you cannot file an ITR for more than one year. The last date to file ITR for 2018-19 is 30 September 2020. If you have not paid tax on your income between April-2018 to March-2019, then you have a chance till September.
If your income is less than Rs 5 lakh, then you have to deposit a late fee of Rs 1,000 and if the income is more than Rs 5 lakh, then you will have to deposit Rs 10 thousand late fee.
If tax is not paid before 31 March 2020, then you may have to pay interest on unpaid tax. If you do not submit the return, you can be fined 50% of the tax levied on you.
If you still do not file ITR, then the penalty under the tax law can be from three years to seven years. However, if the tax levied is less than Rs 10,000, then there will be no litigation.
Will this new system stop tax evasion?
Can only hope Till now the tax department used to estimate income and expenses from Demat accounts, mutual funds, and bank transactions. AI and data analytics make it easier to catch the money trail.
The tax department found cases in Scrutiny where there was no coordination between expenses and returns. Some people have deposited electricity bills more than income. He was issued notice and tax recovery was initiated.
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