Now the days went when it used to be easy to hide some information of his income and transactions. The central government has now given such new powers to the Income Tax Department to tighten black money and tax evasion, after which every detail of your bank’s activity and trading account will be directly under the supervision of the Income Tax Department.
The Income Tax Department has now further tightened the rules of reporting under ‘Information regarding specified financial transactions’ ie ‘Annual Information Statement (AIS)’. In simple language, now it has become mandatory for many financial institutions to give information about your ‘big and special’ transactions directly to the Income Tax Department. Earlier there was such a system, but now its scope has been increased and it has included all the financial activities where there is a large transaction of money. This system comes under Rule 114D of Income Tax Rules, 1962.
Now what will the Income Tax Department be able to see?
Not on your small shopping, but your special financial activities will be closely monitored. This includes:
-
Bank Accounts: All the big deposits in your savings and current account, cash withdrawal and credit card expenses.
-
Share and demat account: All transactions in your stock market, purchase and sale of shares, activities to demat account and income deposited in them.
-
Investment: Information to all kinds of investment like fixed deposits (FD), recurring deposit (RD), mutual funds, bonds, debentures.
-
Property purchase and sale: Details to the purchase and sale of property or any real estate.
-
foreign currency exchange: If you make a big transaction in foreign currency, then its information will also reach the government.
-
gold and silver: Large transactions of precious metals like gold and silver.
Which institutions will give this information?
You will not give all these information to the Income Tax Department yourself, but will give the institutions with which you have financial transactions. Prominent among them are:
-
Bank and post office
-
Non-banking financial companies (NBFCs)
-
Mutual fund house
-
Broker and demat account service provider
-
Sub-registrar (for property)
-
Payment system operator (eg digital wallet companies)
-
Corporate and PSUs that release bonds or debentures
What is the purpose of this?
The main objective of this step is to increase financial transparency in the country. The government believes that this will curb the flow of black money, it will be difficult to steal tax and more people will come under tax. This is to ensure that the person who is earning income honestly pays tax on it.
What worry about honest taxpayer?
If you are an honest taxpayer and the details of your income and transaction declares honestly in income tax returns, then you do not have to be worried at all. This rule is for those who tried to escape from the eyes of the Income Tax Department even by doing large financial activities. This transparency will not increase your trouble, but will ensure that everyone follows the same rules.
It is also very important for the concerned institutions to follow this new rule. If there is any lapse or delay in giving information, then the concerned institution can be fined Rs 500 per day. This is a big step that will bring transparency in the country’s economy and play an important role towards ‘Digital India’ and ‘Clean Financial System’.
