Is the new Annual Information Statement-making life easier or harder for taxpayers?

Is The New Annual Information Statement-Making Life Easier Or Harder For Taxpayers?

Interest income from savings accounts, recurring and fixed deposits, dividend income, securities transactions, including mutual funds, and remittances from overseas are all included in the new AIS.

The new Annual Information Statement (AIS) was recently released on the Income Tax Department’s Compliance Portal. It is essentially a tool that provides a full perspective of a taxpayer’s financial transactions throughout the course of a fiscal year. The new AIS also has a feature for collecting online comments.

Interest income from savings accounts, recurring and fixed deposits, dividend income, securities transactions, including mutual funds, and remittances from overseas are all included in the new AIS. AIS also provides a streamlined Taxpayer Information Summary (TIS), which shows the aggregated value for taxpayers, to make ITR filing easier.

However, many taxpayers are unsure if the new AIS will make their lives easier or more difficult.

The new AIS attempts to simplify tax filing by bringing all financial transactions together in one place. It shows all financial and tax-related information for each taxpayer that the Tax Department has.

Read More…

[pt_view id=”baa39696xe”]

According to Abhishek Soni, Co-founder and CEO of Tax2win, inaccurate information (same amount shown twice, wrong details presented, etc.) is included in the AIS in a few situations, causing complications for taxpayers. “However, because the technologies are new, they are projected to become smoother and more hassle-free with time.” This will be helpful to both parties in the long run, the tax agency and the taxpayers,” Soni told FE Online.

“With all of the relevant information in one location, tax filing will be lot easier for taxpayers, and the chances of any important information being missing out in the ITR will be extremely minimal,” he added.

What a taxpaying citizen can do

If a taxpayer believes the data in AIS is wrong, he or she can use the online feedback feature. You may also provide feedback in bulk by providing numerous pieces of information.

Taxpayers will be able to provide online input on the information displayed in AIS, as well as download information in PDF, JSON, and CSV file formats, according to experts.

“The AIS Utility will allow taxpayers to observe AIS and provide input while offline.” A mobile application for the AIS is also available, allowing taxpayers to view the AIS and provide input while on the go. The AIS system was created to increase transparency and streamline the tax system. According to Saraf, the government may also replace Form 26AS with a new AIS for taxpayers.

Utility of the AIS

The IRS has created an AIS Utility that allows taxpayers to see AIS and upload feedback while offline. In the AIS, the reported value and the value after feedback will be displayed separately. If the information is changed or denied, the source of the information may be contacted for confirmation.

Simplified TIS for ITR filing

For each taxpayer, a simplified Taxpayer Information Summary (TIS) has been prepared, which displays the taxpayer’s aggregated value for simplicity of return filing. “TIS displays the processed value (i.e., the value obtained after information is deduplicated using pre-defined rules) as well as the derived value” (i.e. the value derived after considering the taxpayer feedback and processed value). The derived information in TIS will be instantly updated in real-time if the taxpayer offers comments on AIS. The resulting information in TIS will be utilised to pre-fill the Return (pre-filling will be enabled in stages),” according to the Finance Ministry.

List of high-value transactions that could result in a tax notice.

What about transactions that aren’t showing up in AIS?

It’s vital to remember that the new AIS incorporates information that’s currently available from the IRS. However, other transactions involving the taxpayer that are not now visible in AIS may exist. As a result, a taxpayer should double-check all relevant information and file a complete and accurate Income Tax Return.

Taxpayers can evaluate the information displayed in AIS and provide comments if it needs to be changed.

Also, while filing the ITR, the value stated in the Taxpayer Information Summary (TIS) may be taken into account. If the ITR has already been filed and some information has been left out, the return may be updated to add the missing information.

“In the event of a discrepancy between the TDS/TCS information or tax payment details displayed in Form26AS on TRACES portal and the TDS/TCS information or tax payment details displayed in AIS on Compliance Portal, the taxpayer may rely on the information displayed on TRACES portal for the purpose of filing ITR and other tax compliance purposes,” the Finance Ministry stated.

The presentation of Form 26AS on the TRACES portal will continue in parallel until the new AIS is validated and fully operational.

Frequent Errors That Taxpayers Should Avoid While Preparing Tax Returns.

 Frequent Errors That Taxpayers Should Avoid While Preparing Tax Returns.

Filing income tax returns (ITR) is a breeze for taxpayers who earn a salary and own a single home. They can simply complete out ITR-1. The same cannot be said for people who must file ITR-2, ITR-3, or ITR-4 tax returns, which are more complicated.

Particularly as the Internal Revenue Service has tightened standards to plug tax leaks in recent years, people have made a number of unintended blunders. As the deadline for filing ITRs approaches on December 31st, here are some frequent ITR filing errors, their consequences, and how to avoid them.

Form 26AS statement is not reconciled

Before submitting an ITR, taxpayers should always double-check Form 26AS. It includes information on an individual’s earnings, TDS, advance tax paid, self-assessment tax paid, and more. All salaried employees must double-check their information on Forms 16 and 26AS provided by their employers.

Read More…

[pt_view id=”baa39696xe”]

If a disparity in income is discovered, for example, the I-T department will issue a notice. The I-T department just released the Annual Information Statement (AIS). Before you file your ITR, double-check this statement.

Incomplete and incorrect bank information

Incorrectly filling out bank information is a regular blunder. Incorrect or incomplete bank details may make it impossible for the I-T department to issue a refund to your bank account, and you may be forced to go through the time-consuming process of raising a refund reissue request. To receive your return on time, double-check that your bank account number, account holder’s name, and IFSC code are right.

Also, remember to pre-validate your bank account; otherwise, the IRS will be unable to process your refund.

Not to mention the income that is tax-free

Another common blunder is when taxpayers fail to mention or forget about exempted income. Because exempt income isn’t taxed, it’s assumed that it doesn’t need to be mentioned. That, however, is not the case. If a taxpayer’s gross income exceeds 2.5 lakh or though they meet certain circumstances even if their total income is less than 2.5 lakh, they must file an ITR. For example, if a person spends more than Rs. 2 lakh on international travel in a fiscal year, he or she must file an ITR.

More than two properties are not taken into account.

Even while not everyone owns two or more homes, those who do must report them. According to the most recent revision to the Income Tax Act of 1961, two properties can now be claimed as self-occupied, while the remaining properties are presumed to be let out. Even if the property stays vacant for the entire year and the taxpayer receives no financial gain, it is still taxable. The individual’s properties are taxed on a fictitious basis. Tax evasion can be defined as discrepancies in these details.

9 WAYS TO SAVE MONEY ON TAXES WHILE ALSO IMPROVING FINANCIAL HEALTH

Giving incorrect disclosure

Taxpayers continue to make the mistake of incorrectly disclosing all sources of income and assets. For example, if a person knowingly provides false information about his or her total income from all sources, he or she may face jail and/or a punishment. Similarly, if the ITR is submitted using the incorrect ITR form, the tax officer may regard the return as invalid. Any mistake or non-disclosure is a significant offence, and the IRS treats it very seriously.

Giving incorrect disclosure

Taxpayers continue to make the mistake of incorrectly disclosing all sources of income and assets. For example, if a person knowingly provides false information about his or her total income from all sources, he or she may face jail and/or a punishment. Similarly, if the ITR is submitted using the incorrect ITR form, the tax officer may regard the return as invalid. Any mistake or non-disclosure is a significant offence, and the IRS treats it very seriously.

Many taxpayers assume they are exempt from paying advance tax because TDS has been deducted. This, however, is not the case. When the difference between a taxpayer’s total tax liability and the tax deducted at source reaches a certain threshold, the taxpayer must pay advance tax. Interest will be charged if advance tax is not paid on time. Assume that a taxpayer is in the 30% tax bracket and that the TDS on income is deducted at a rate of 10% or not at all. The remaining tax must be computed and paid in advance in this case.

Taxpayers must now break down dividend income each quarter

Taxpayers Must Now Break Down Dividend Income Each Quarter

Several adjustments have been implemented for the current Assessment Year of Income Tax Returns Filing, i.e. AY22. One such big shift is the reporting of dividend income, among other things. If a taxpayer received dividend income in the previous fiscal year, the following modifications must be noted in order to assure error-free filing of Income Tax Returns.

Dividend income up to Rs 10 lakh in a given year was not taxable for taxpayers before to the Financial Year FY21 because organisations had to pay a Dividend Distribution Tax (DDT) before making dividend payments. Those who got dividends of greater than Rs 10 lakh, on the other hand, used to pay only 10% tax on the dividend payout.

The government, however, has rendered dividends distributed by an organisation taxable beginning in FY21. In addition, if the cluster charge of dividends delivered to resident shareholders exceeds Rs 5,000 in a financial year, domestic enterprises must deduct tax at source (TDS) at a rate of 10%.

Related Article…

[pt_view id=”baa39696xe”]

Initially, dividend income was reported under the heading ‘Exempted Income’ while filing an ITR. However, as per section 56 (2) I this income is now taxable and appears under the heading ‘Income from other sources.’ It’s worth noting that the schedule OS in the latest ITR forms released by the government has been changed to include data of the dividend income collected by taxpayers this year.

Dividend income broken down by quarter

According to tax experts, taxpayers are now required to produce a quarter-by-quarter breakup of dividend income received in a financial year in order to calculate interest for the delinquency in payment of advance tax liability.

How much tax is levied on the selling of unlisted shares?

The breakdown can be provided for the following dates: 1 April 2020 to 15 June 2020, 16 June 2020 to 15 September, 16 September 2020 to 15 December 2020, 16 December 2020 to 15 March 2021, and 16 March 2021 to 31 March 2021. Furthermore, this quarterly filing is required to help reduce advance tax penalties on dividend income.

It’s worth noting that taxpayers are now required to pay advance tax in the quarter in which the dividend is received. Because it was not possible to cite dividend income in advance, there was once an exemption from the interest penalty for non-payment of the advance tax on dividend income. Because the Income Tax Department has made it mandatory for organizations to notify the information of dividends paid to the department, it is extremely likely that dividend income will be delivered pre-filled to taxpayers beginning this year. It’s worth noting that if you obtain pre-filled data in your ITR, you should double-check the information.