In Budget 2020, The finance minister has proposed to replace the Form 26AS by Annual Information Statement. These statements will also have details of shares and MF transactions conducted by taxpayers. This proposal has been given to stop tax evasion.
Form 26AS is an annual consolidated credit statement issued by the income tax department under Section 203AA of Income-tax Act, 1961. Besides information that 26AS provides, the new AIS will include the details of shares and mutual fund transactions conducted by taxpayers during the relevant assessment year. Section 203AA will get replaced by a new Section 285BB, which will facilitate AIS.
“The erstwhile Form 26AS was prescribed to contain and provide information regarding taxes paid by or tax deducted at source (TDS) on behalf of a taxpayer, which could be used both by the taxpayer as well as the tax authorities. With an objective to make the statement more detailed and comprehensive, it is now proposed to replace Form 26AS with a new AIS for a taxpayer. In addition to details of taxes paid or TDS, AIS will also contain details of other important financial transactions undertaken by the taxpayer such as sale or purchase of immovable property and share transactions,” said Shailesh Kumar, director, Nangia Andersen consulting, a business tax advisory firm.
The format of the AIS is not yet confirmed. “It will be interesting to see what and how much information is sought to be covered in such a statement. It is expected to increase the exchange of information and transparency between the taxpayers and tax authorities. This statement is also expected to widen the tax base and discourage taxpayers to conceal information about their financial transactions with the tax authorities,” said Kumar.