Form 26AS: Transition from Annual Tax Statement to Annual Information Statement

Form 26AS (Tax Credit Statement) is the Annual Tax Statement in which the details of tax credit are maintained for each taxpayer as per the database of Income-tax Department.

Section 203AA of The Income Tax Act, 1961 ('The Act'), inter-alia, requires the prescribed income-tax authority or the person authorised by such authority referred to in Section 200(3) of The Act, to prepare and deliver a statement in Form 26AS to every person from whose income, the tax has been deducted or in respect of whose income, the tax has been paid, specifying the amount of tax deducted or paid. [Read with Rule 31AB of Income-tax Rules, 1962 ('The Rules')].

The Form 26AS as prescribed in the Rules, contains details of tax deducted at source (TDS), tax collected at source (TCS), advance tax payments, self-assessment tax payments, Tax paid on Regular Assessment, refund received by as assessee and other AIR Transactions along with TDS Defaults, if any.

With the advancement in technology and enhancement in the capacity of system, multiple information in respect of a person such as sale/purchase of immovable property, share transactions etc. are being captured or proposed to be captured. In future, it is envisaged that in order to facilitate compliance, this information will be provided to the assessee by uploading the same in the registered account of the assessee on the designated portal of the Income-tax Department, so that the same can be used by the assessee for filing of the return of income and calculating his correct tax liability.

As the mandate of Form 26AS would be required to be extended beyond the information about tax deducted/collected, a new Section 285BB is introduced in The Act regarding 'Annual Information Statement' vide The Finance Act, 2020. Consequently, Section 203AA of The Act is deleted and Section 285BB is inserted with effect from 01.06.2020.

Extracts of The Finance Act, 2020 in respect of Section 285BB -

Hence, CBDT vide Gazette Notification No. 30/2020/F. No. 370142/20/2020-TPL dated 28.05.2020 inserted a New Rule 114-I in The Rules in respect of 'Annual Information Statement' - Form No. 26AS which may be called ‘The Income-tax (11th Amendment) Rules, 2020’.

Rule 31AB is now omitted and these changes shall come into force with effect from the 01.06.2020, as mentioned above.

As it can be seen from the above Notification, An Annual Information Statement in Form No. 26AS shall now contain not only information about TDS / TCS but also information relating to Specified Financial Transactions, payment of taxes, Tax demand / refund and pending / completed proceedings w.e.f. 01.06.2020. Also, the said statement is required to be updated within 3 Months by the Tax department from the end of the month in which the information is received in respect of above mentioned matter.

• An Annual Information Statement in Form No. 26AS shall now contain Aadhaar Number, Mobile Number, E-Mail Address and Date of Birth/Incorporation in addition to Name, PAN and Address of the assessee.
• An Annual Information Statement in Form No. 26AS shall now contain information relating to "specified financial transaction". As per Section 285BA(3) of The Act, "specified financial transaction" means any -

1. transaction of purchase, sale or exchange of goods or property or right or interest in a property; or
2. transaction for rendering any service; or
3. transaction under a works contract; or
4. transaction by way of an investment made or an expenditure incurred; or
5. transaction for taking or accepting any loan or deposit.

The AIR information in Erstwhile Form 26AS used to include below-mentioned types of Transactions.

• The 'specified financial transaction' in an Annual Information Statement in Form No. 26AS now includes below mentioned types of Transactions.

1. Cash payments for purchase of bank drafts or pay orders or banker's cheque of an amount aggregating to ten lakh rupees or more in a financial year.
2. Cash payments aggregating to ten lakh rupees or more during the financial year for purchase of pre-paid instruments issued by Reserve Bank of India.
3. Cash deposits / withdrawals aggregating to fifty lakh rupees or more in a financial year, in or from one or more current account of a person.
4. Cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.
5. One or more time deposits of a person aggregating to ten lakh rupees or more in a financial year of a person.
6. Credit Card Payments made of an amount aggregating to one lakh rupees or more in cash or ten lakh rupees or more by any other mode, in a financial year.
7. Acquiring bonds or debentures for an amount aggregating to ten lakh rupees or more in a financial year.
8. Acquiring shares for an amount aggregating to ten lakh rupees or more in a financial year.
9. Buy back of shares for an amount aggregating to ten lakh rupees or more in a financial year.
10. Acquiring units of one or more schemes of a Mutual Fund aggregating to ten lakh rupees or more in a financial year.
11. Purchase of foreign currency aggregating to ten lakh rupees or more during a financial year.
12. Purchase or sale of immovable property for an amount of thirty lakh rupees or more.
13. Cash payment exceeding two lakh rupees for sale of goods or services.

• An Annual Information Statement in Form No. 26AS shall also contain information relating to any outstanding demand in addition to details in respect of Taxes paid and Refund received during the previous year.
• An Annual Information Statement in Form No. 26AS shall now contain details of all pending income tax proceedings with tax department along with the details of proceedings which have been completed during the year.
• An Annual Information Statement in Form No. 26AS shall also contain information received under an agreement referred to in section 90 (Agreement with foreign countries or specified territories) or section 90A of The Act (Adoption by Central Government of agreement between specified associations for double taxation relief), as per Sub-rule (2) of Rule 114-I.

The New Form 26AS is certainly more comprehensive and informative and will be a complete profile of the taxpayer for a particular assessment year with all information at one place.

It will become a vital tool not only for Tax Authorities to analyze all details in respect of the assessee for any particular assessment year but also it will help assessees and their consultants to effectively file their return of income