On 1st February 2021, Annual Financial Statement (Budget) was released by Finance Minister, Nirmala Sitaraman and brought some reform in the ITR Filing. The reform focuses on the listed financial and non-financial bodies to report the transaction of the capital gain and the same should be pre-filled in the Income Tax form.
The capital gain covers the interest from the banks, dividend, and post-office interest. Before the reform of Income Tax Returns 2021-22, section 285BA of Income Tax Act, 1961 was in operation and it was limited to some financial entities to report the transaction to the IT Authority.
Role of Specified Entities under section 285BA IT Act, 1961
The specified entities comprise Non-Banking Financial Company, Banks, Post Office, Companies issuing the credit cards, and bonds issuing companies. They need to report the transactions to the IT Authority and the list of the transaction is listed below.
- A cash deposit of an amount more than Rs 10 lakh excluding current deposit and fixed deposit.
- The transaction was done through a credit card above Rs 10 lakh.
- Purchase of shares and bonds of Rs 10 lakh or above.
- Purchase of immovable property such as a house or other real estate utilities above Rs 30 lakh.
There are many more in the list and if such a transaction occurs, then the specified entities need to report to the IT team.
What changes will take place after Income Tax Returns 2021-22 Reform
The new reform will hold the grip more tightly against the financial entities and thus will bring more transparency in the Financial Market. The authorized entities that come under this new reform are listed below.
The stock exchanges, Asset Management Portfolio companies (Mutual Fund), and registered corporations need to report the capital gains to the IT Authority.
Next on the list are the Banks, NBFC, and post offices and they need to report the income obtained through the interest rates.
Through this reform, the ITR filing will be simpler and the department will get a clear picture of all the transactions of the tax filers.
Also, the taxpayers must check the pre-filled ITR and the respective documents to avoid any form of errors.
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