Under the Aggregation Rule 114E for reporting under SFT-005 time-deposits by banks in Form 26AS of the depositors, banks are required to attribute the aggregate deposit of all the holders to each of the deposit holders. Except where clubbing provisions apply, the interest income from an FD is taxed in the hands of the first holder only. Therefore, the aggregation rule seems to be irrational, misleading and counter-productive. It does not give the IT department a clear picture of deposits in relation to income, thereby obscuring the purpose behind SFT disclosures. Strangely, the PANs of the deposit holders are not required to be reported.
The aggregation rule should be modified so that banks are required to report separately in Form 26AS of a person, the FDs made by the person as first holder and as second or third holder. This will present a clear picture and IT department will not have to seek clarifications from tax-payers and the tax-payers will not have to waste time and effort in giving clarifications.
Aggregation Rule 114E
Aggregation rule needs to be applied for specified transaction types to identify transactions/persons/accounts which are reportable. Rule 1 14E specifies that the reporting person shall, while aggregating the amounts for determining the threshold amount for reporting in respect of any person –
(a) take into account all the accounts of the same nature maintained in respect of that person during the financial year;
(b) aggregate all the transactions of the same nature recorded in respect of that person during the financial year;
(c) attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons, in a case where the account is maintained or transaction is recorded in the name of more than one person;
The aggregation rule is applicable for all transaction types except SFT- 012 (Purchase or sale of immovable property) and SFT- 013 (Cash payment for goods and services).
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