Form No. 26AS: Check before you file your Income Tax Returns
One of the most common documents which every taxpayer must check before finalizing income tax return is Annual Information Statement (Commonly referred to as Form No. 26AS). Till last year, Form 26AS was just an annual tax credit statement designed to give details of TDS/TCS, Advance tax & Refund. However, new Form 26AS is now containing the complete profile of taxpayers as details of pending and completed income tax proceedings, status of income tax demand and refund, Turnover as per GST returns, etc has also been included within its fold.
From just an Annual Tax Statement earlier, the new Form has now become an Annual Information Statement. Ignorance of this statement may be very detrimental from the taxpayer’s perspective. It has become a potent tool in the hands of the tax authorities. Taxpayers must reconcile 26AS data with their record before filing their income tax return. It may be noted that the income tax department carries out the data analytics using various tools & any tax escapement by the taxpayer (whether advertently or inadvertently) is subject to the scrutiny proceeding which results in unnecessary compliance & penal consequences. Let us know about the contents & importance of Form No 26AS and the common points which every taxpayer must know about it.
- The new Form 26AS has two parts: Part A and Part B.
Part A of the Form contains general information about the taxpayer against the following fields: 1. Permanent Account Number 2. Aadhar Number 3. Name 4. Date of Birth/Incorporation 5. Mobile number 6. Email address 7. Address
Part B of the Form contains the following information:
- Information relating to tax deducted or collected at source
- Information relating to specified financial transactions (SFT)
iii. Information relating to payment of taxes
- Information relating to demand and refund
- Information relating to pending proceedings
- Information relating to completed proceedings
vii. Any other information in relation to sub-rule (2) of rule 114-I.
- It may be noted that in Part A contains mobile no, Email-id and Aadhar no. of the taxpayer. Since most of the communication is now done in electronic mode, taxpayers must ensure that the email id and mobile number is correctly updated in Form No. 26AS.
- Now, information in Form No. 26AS will not be a one-time affair of year end. It will be a live 26AS as it will be updated regularly within 3 months from the end of the month in which such information is received. So, taxpayers must refer to 26AS on a regular basis.
- Now, 26AS also contains information regarding tax refunds and demands. As a result, Banks, financial institutions or any other authority or customer, buyer etc. may now also ask for form 26AS while carrying out due diligence of the person. Form 26AS can provide information with regards to any proceedings against under any law or tax demand, tax disputes etc.
- Till last year, the Department was not having direct information related to dividend income, interest income from post office/ NBFC & Capital gain or loss on mutual fund / share transactions. But now, the same is also collected by the department and is forming the part of the 26AS. Taxpayers must cross – check that the same while filing their income tax returns.
- Many taxpayers often failed to incorporate income from shares or mutual funds in their income tax returns. New 26AS now shows the details of such transactions also. The taxpayers must consider the same while filing their income tax returns. Now all companies issuing shares or mutual funds are required to furnish the Statement of Financial Transaction (SFT) for transactions in shares and mutual funds, etc. amounting to 10 lakh or more.
- Verification of details in26AS vis-à-vis TDS certificates:
a) Taxpayers must check if the income details and TDS details are matching with their record. If there is a mismatch in either the quantum of income or the TDS then this should be brought to the notice for their correction.
b) There are cases wherein the income is wrongly getting reflected in the 26AS of the taxpayers. In such cases, taxpayers must ensure to get it rectified by appropriately taking up the issue with the TDS AO of the concerned deductor.
c) There are the instances where TDS done by the deductor is not getting reflected in 26AS of the taxpayers. Non-reflection of TDS in 26AS results in denial of TDS credit. This often happens due to non filing of TDS return or erroneous filing of TDS return by the deductor. Taxpayers are required to take this issue directly with the deductor for getting the TDS credit.
d) Taxpayers must also carefully note the section quoted by the deductor while uploading the details of TDS. There are instances where the deductor has filed TDS returns erroneously with regard to the nature of payment (For example, TDS is done by deductor on interest payment U/s 194A. However, while filing TDS returns the same is reflected u/s 194H i.e., Brokerage). In such cases, taxpayers must get such errors rectified by pursuing the issue with the deductor so as to avoid notices and wrong processing by the income tax portal.
e) In case of difference between the actual TDS & TDS as reflected in 26AS, the taxpayer cannot claim the TDS of the actual amount. Often the discrepancy can occur due to Incorrect quoting of PAN, incorrect quoting of assessment year, omission in Return, etc. In all such cases, the taxpayer should approach the deductor and request him to take necessary steps for the rectification of the TDS returns. The deductor may file the correct TDS/TCS or submit a correction statement for the same.
- SFT transactions:
a) New form 26AS now provides information in respect of “Specified financial transactions” (SFT). These are high value transactions carried out by the assessee. Taxpayers should ensure that the information contained in this part of 26AS is correct and is related to him.
b) Taxpayers are not required to do anything with this information while filing their income tax return. It is just a message by the department to the taxpayers that they are well aware of the high value transactions carried out by the department.
c) More particularly, this part of 26AS shows information such as purchase/sale of immoveable property above Rs. 30 Lakh, cash deposits or cash withdrawals aggregating to Rs 50 lakh or more in a financial year in or from one or more current account of a person, Cash deposits aggregating to Rs 10 lakh or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person, etc.
d) It is important to note that though these transactions may be perfectly legitimate, the authorities verify such information vis-à-vis income of the taxpayers. For example, let us say a person declares his income at Rs 4 lakh but his credit card Bill payment is say Rs. 10 Lakh. In such a case, the department may take up the case for scrutiny assessment or further enquiry.
- There are few new section & code which are relevant from the taxpayers perspective as under:
a) Section 194K: It provides the details of redemption from Mutual Fund
b) Section 194: It provides the details of Dividend Income
c) Section 260CL: It is for TCS on Motor Vehicle Purchased
d) Section 260CO: It is for TCS on purchase of Foreign Tour Packages
e) Section 260CP: It is for TCS on Foreign Remittance from education loan
f) Section 260CQ: It is for TCS on Foreign Remittance under LRS other than above.
g) Section 260CR: It is for TCS on sale of Goods.
Incorporating & disclosing various details in Form 26AS is an attempt by the Government to make the tax administration more transparent & inclusive. Every taxpayer must ensure to check it regularly while filing their income returns.