If you are a salaried individual and trade in shares on a regular basis or you have significant dividend income then you can no more hide these transactions from the taxman’s lens. Till now, many salaried taxpayers have been hiding these transactions for reason s such as ignorance, avoiding trouble of calculating the capital gains/losses, fear of filing more complicated ITR form than the ITR-1 or to reduce their tax liability.
Taxpayers were able to do so because the Income Tax Department used to get information related to just income from salary, interest on bank fixed deposit (Bank FD) and taxes paid from the respective sources. These transactions were also reflected in Form 26AS.
But from April 1, 2021, the I-T department will also get information related to your share trading, mutual fund transaction, dividend income as well as interest on Post Office deposits and deposits in Non Banking Financial Companies (NBFCs). These transactions will also be reflected in the new format of Form 26AS.
As the I-T department will get all this information directly from your broker,/AMC/ post office, it will be difficult for for tax evaders to suppress these incomes.
Until now ITR forms allowed taxpayers to auto populate details such as Name, PAN, Address, Bank Details, Tax payment and TDS, etc. While presenting the Union Budget for FY22, the Finance Minister said that ITR forms will now come pre-filled with details such as capital gains from listed securities, dividend income, and interest from banks, post office, etc. for the purpose of easing the procedure of return filing.
To make these proposals effective, the CBDT issued a notification on March 12, 2021, wherein it said that a specified category of persons required to furnish a statement of financial transaction u/s 285BA of the Income Tax Act, 1961, and it should include information pertaining to capital gains on transfer of listed securities or units of Mutual Funds, dividend income, and interest income. The category of persons required to report such transactions are recognised Stock Exchange such as BSE, NSE, depositories, recognised clearing corporation, registrar to an IPO, share transfer agents, companies distributing dividend, banking companies or a co-operative bank covered under the banking laws, Post Master General defined under the Indian Post Office Act, 1898 and NBFCs.
So from April 1, 2021, due to the broad coverage of data in the Annual Information Statement (AIS), the taxpayer needs to ensure that all details of income from sources such as salary, interest, dividend, capital gains rom mutual funds and shares, are shown in the ITR. Any escapement by the taxpayer on this may attract severe penalty, say tax experts.
Source: https://www.timesnownews.com/business-economy/personal-finance/income-tax/article/trade-in-shares-from-april-1-you-can-not-hide-these-transactions-from-i-t-department/736077
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