List of transactions that will be reported to the Income Tax Department

CBDT via a circular dated March 12, 2021 provided for the reporting of a certain transactions to the Income Tax Department. It has already introduced pre-filled income tax returns for the easy and accurate filling of the same.

The list of transactions mainly covers capital gains, dividend income and interest income. The taxpayers are now required to submit the exact details of such transactions to the department.

Specified entities are supposed to report specified financial transactions to the Income Tax department as per provisions of section 285BA. Accordingly, a list of such transactions along with their nature and threshold limits are prescribed by the section. The taxpayers who are covered by the said provisions shall have to report the details of these transactions if they fall within the purview of it.

The reporting will help the IT Department to track the high value transactions of the taxpayers and helps it find suspicious transaction in the due course. The entities that need to report specified transactions include Banks, Post offices, NBFCs, credit card issuing companies, companies issuing shares, debentures or bonds. The transactions that need to be reported under section 285BA are many. A few examples are given here:

1. Credit card payment above Rs.10 lakh.
2. Cash deposits of more than Rs.10 lakh, except in current and fixed deposits.
3. Purchase of bonds, debentures, mutual funds or stocks of more than Rs.10 lakh
4. Fresh bond deposits of Rs.10 lakh.
5. Purchase/sale of immovable property of more than Rs.30 lakh and so on.

The circular that has been issued recently extends its applicability to a few more transactions like capital gains of listed securities or mutual funds units, dividend income and interest income that has been earned.

The following authorities are authorised to report such transactions to the department:

-Recognised stock exchanges, depositories, registrar and share transfer agents and recognised corporations for reporting capital gains on equities and mutual funds

-Declaring companies to report dividend income

-Interest income to be reported by banks, NBFCs and post offices.

The reporting should be done on or before 31^st May of the respective assessment year and it is to be done by these entities in the intervals, communicating through further notices. However, there is no threshold limit for reporting these transactions because they are used for providing pre-filled Income tax returns to all the taxpayers filing ITRs. Hence the taxpayers need to be careful while reporting despite the ITRs being now easier to fill in. The income tax department shall take actions for failure to comply with the above provisions. In order to avoid any mistakes, it is advisable to check ITRs carefully with respect to the underlying documents like banks statements, interest certificate, Form 26AS etc.

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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