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August 14, 2020

Income Tax Form 26AS will reflect, Hotel Bill & Medical Insurance of over Rs 20000, Foreign Travel, Locker Details, etc check full list

by facelesscompliance in Income Tax

Income Tax Form 26AS will reflect, Hotel Bill & Medical Insurance of over Rs 20000, Foreign Travel, Locker Details, etc check full list

Modi Government expands Scope of Reporting Transactions, will come under Income Tax Scanner

Accumulation of black money has been one of the major threats to the Indian economy. The government of India along with the ministry of finance has been striving towards curbing black money and also widening the tax base and has taken numerous initiatives in this regard. One such initiative was to cast an obligation on government agencies and other authorities who are a valuable and reliable source of information, to report high-value transactions.

What is statement of financial transaction (SFT)?

“SFT is a report filed by ‘specified persons’ under Section 285BA, which records transactions exceeding the threshold limit, including investments and expenditures done by taxpayers in a financial year.

These specified entities, including banks, mutual funds, institutions issuing bonds and registrars or sub-registrars, have to file the SFT containing details of high-value transactions. Financial transaction specifically required to be reported under Section 285BA are as follows:-

  • Transaction of purchase, sale/ exchange of goods or property or right or interest in a property; or
  • transaction for rendering any service; or
  • transaction under a works contract; or
  • transaction by way of an investment made or an expenditure incurred; or
  • transaction for taking or accepting any loan or deposit

What are High Value transactions?

The transactions done in the high denomination are known as high value transactions. There is no definition of High Value Transaction and also it does not have to be assumed on the basis of turnover or net worth, however, threshold limit has been prescribed for the High Value Transaction. Following are the list of high value transactions:-

  • Aggregate cash deposit for Rs 10 lakh or more in saving bank account. If you have two saving bank account and the total deposit exceeds Rs 10 lakh in a year, the Bank is required to report this to Income Tax department.
  • Purchases of bank drafts, pay orders, purchase order’s or bankers cheque in cash for Rs 10 lakh or more in a year.
  • Cash payment made for Fixed Deposits amounting Rs 10 lakh or more in a year. However, these fixed time deposits will not include deposits made through renewal of other fixed deposit.
  • Purchase of any pre-paid instruments issued by RBI of Rs 10 lakh or more in a year. 
  • Cash deposit or withdrawal amounting Rs. 50 Lakh or more in one or more current accounts of a person in a year
  • Cash received for amount exceeding Rs. 2 Lakh for the sale of goods or rendering of services.
  • Expenditure in foreign currency via debit card, credit card or traveler’s cheque for the amount Rs.10 Lakh or above in a year.
  • Payment by credit card amounting Rs.10 Lakh or above in a year
  • Credit card bill paid in cash for Rs 1 lakh or more.
  • Purchase or sale of immovable property having guidance value of Rs. 30 Lakh or above. The actual price of sale or purchase is irrelevant
  • Mutual Fund Investment in a year of Rs 10 lakh or more.
  • Purchase of bonds or debentures for Rs 10 lakh or more in a year.
  • Purchase of shares of company through the public offer or right issue for Rs 10 lakh or more.
  • Share buy-back from a person amounting Rs. 10 lakhs or more.

Expansion of Scope of Reporting under SFT

Narendra Modi government announced a landmark shift in the income tax administration to make it simple, painless and transparent. While launching the ‘Transparent Taxation – Honoring the Honest’ platform yesterday, Prime Minister Narendra Modi had on 13th August, 2020 said the ongoing reforms aim at making the tax system seamless, painless, faceless.

In a list of proposed measures to widen the tax base, in a tweet, government said no taxpayer should be left behind in the drive to ensure better compliance and transparency.

Now hotel bills above Rs 20,000, health insurance premium above Rs 20,000, payment of education fees above Rs 1 lakh, purchase of jewellery, white goods, paintings, marble above Rs 1 lakh could get you under the income tax scanner.

The finance ministry has also proposed new measures to ensure better compliance and transparency by expanding the scope of reporting of following high value transactions:

  • Education related fees and donations above Rs 1 lakh in a year
  • Electricity bill of more than Rs 1 lakh in a year
  • Domestic business class air travel or foreign travel
  • Hotel bills above Rs 20,000
  • Purchase of jewellery, white goods, paintings, marble, etc above Rs 1 lakh
  • Deposits or credits in current account above Rs 50 lakh
  • Deposits or credits in non-current account above Rs 25 lakh
  • Payment of property tax above Rs 20,000 per annum
  • Life insurance premium above Rs 50,000
  • Health insurance premium above Rs 20,000
  • Share transactions, demat account, bank lockers

The government has also proposed to deduct TDS at higher rates for those who do not file income tax returns (ITR). There is also a proposal for compulsory filing of ITR by those having bank transactions above Rs 30 lakh, all professionals and businesses having turnover of more than Rs 50 lakh and payment of rent above Rs 40,000.

This move came in the backdrop of the observation made by Prime Minister Narendra Modi that in a country of 130 crore of population, only 1.5 crore pay taxes, and such a trend is worrisome for the growth of the nation. Government has been constantly working towards expanding the tax base to the burden of taxes on a limited population of the country.

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