Transparent Taxation Scheme: The expenses that are going to reflect in 26AS



Quick Summary
Launched in August 2020, the Transparent Taxation Scheme aims to enhance tax compliance and transparency. The Income Tax Department is expanding its data collection to identify individuals making significant purchases without filing taxes. This includes reporting of various expenses like education fees, donations, electricity consumption, travel, hotel payments, and purchases of jewellery or white goods exceeding certain thresholds.

PM Modi launched the transparent taxation scheme on the 13th of August 2020, which brings many changes in the taxation system. The government said no taxpayer should be left behind in the drive to ensure better compliance and transparency.

The Income Tax Department is looking forward to digging the data to identify people, who are making large purchases but are not paying taxes or filing their tax returns.

Expenses that are going to reflect in 26AS.

Transparent Taxation: What Expenses Show Up in 26AS

Expansion of scope of reporting of transactions(SFT):-

  • Payment of Education fees exceeding Rs.1 lakh.
  • Payment of donation above Rs.1 lakh p.a
  • Electricity consumption above Rs.1 lakh.
  • Domestic business class air travel / foreign travel.
  • Expenditure of Rs 2 lakh on foreign travel.
  • Payment to hotels above Rs.20000.
  • Deposit above Rs 1 crore in the current account.
  • Purchase of Jewellery, white goods, painting, marble, etc.  above Rs.1 lakh.
  • Deposit or credits in the current account above Rs,50 lakhs.
  • Deposit/ Credit in the non-current account above Rs.25 lakhs.
  • Payment of property tax above Rs.20000 p.a.
  • Life insurance premium above Rs.50,000.
  • Health insurance premium above Rs.20,000.
  • Share transactions / DMAT accounts / Bank lockers. TDS on cash withdrawal above Rs 1 crore (Rs 20 lakh for non-filers).
 

Deduction or Collection of Tax on new transactions:-

  • TCS on the motor vehicle above Rs 10 lakh
  • TCS on foreign remittance under LRS above Rs 7.5 lakh/overseas tour packages.
  • TDS on e-commerce suppliers.
  • TCS on purchase of goods above Rs 50 lakh.
  • Sale of foreign exchange above Rs 10 lakh.

Deduction or collection of tax at higher rates for non-filers of return.

Expansion of scope of Reporting of Transaction(SFT).

  • Cash deposit or withdrawal of Rs.50 lakh or more in the current account.
  • A cash deposit of Rs.10 lakh or more in a non-current account.
  • Sale of foreign exchange above Rs.10 lakhs.
  • The reporting of transactions of mutual funds, credit card transactions, immovable property, etc rationalized.

Compulsory filing of return by a person

  • having bank transaction above Rs. 30lakhs,
  • all professionals, business having turnover above Rs.50 lakhs,
  • payment of rent above Rs. 40,000.
 

The author is a member of the Institute of Certified Practicing Accountant, Australia, and an Associate member of the Institute of Chartered Accountants of India and can be reached at casusmitadutta@gmail.com.

Disclaimer: The facts and opinions written in this column are those of the author and have been prepared on the basis of relevant provisions and information available at the time of preparation. The article does not constitute any professional advice or a formal recommendation. The author has undertaken the utmost care to disseminate true and correct views and does not accept liability for any errors or omissions.


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