Confusion in AIR for taxpayers!!

Last updated: 21 August 2007 Follow on Google News

Worryingly for taxpayers, there is confusion in the air about AIR (annual information return) ever since the taxman issued an FAQ relating to ITR (income-tax return) forms. FAQs are supposed to clarify things but what is causing puzzlement to assessees is the ‘limit’ relating to financial transactions for AIR, specified in one of the ‘frequently asked’ questions, posted recently on www.incometaxindiaefiling.gov.in. Question number 64, the last in the list, reads: “In schedule of AIR of all ITRS relating to financial transactions whether the limit fixed is for aggregate or single in each category as shown in the following transactions: (a) savings account with more than one bank; (b) credit card with more than one bank; (c) purchase of units of mutual funds; (d) bonds or debenture of more than one company or institution; (e) equity shares issued by more than one company; (f) purchase or sale of more than one property.” The Department’s answer: “This limit is the aggregate value for all transactions except property value, where it is the value of a single transaction.” For starters, AIR, brought in from 2004, is required to be submitted every year by stock exchanges, depositories, and authorities such as those responsible for motor vehicles and property transfers. ‘Specified financial transaction’, according to Section 285BA(3) of the Income Tax Act, 1961 means: transaction of purchase, sale or exchange of goods or property or right or interest in property; transaction for rendering any service; transaction relating to works contract; transaction by way of investment or expenditure; and transaction relating to any loan or deposit. “The above categories cover a wide range of transactions which can be varied from time to time by modifying Rule 114E of Income-tax Rules,” explains Mr V.K. Subramani, an Erode-based chartered accountant. “Section 285BA casts obligation in respect of ‘specified financial transaction’ to be reported. And Rule 114E is about the nature and value of transactions to be reported,” he adds, in an email interaction with Business Line. For example, a company issuing shares through a public or rights issue is obliged to report in AIR info about receipt from any person of an amount of Rs 1 lakh or more for acquiring shares issued by the company. Banks have to report cash deposits aggregating to Rs 10 lakh or more in a year in any savings account of a person maintained in that bank. Now, by saying that the limit is ‘the aggregate value for all transactions except property’, the new FAQ can put the investors to additional work when they fill up their individual tax return forms. Because, going by the answer given by the Department, a taxpayer who has subscribed for shares in five companies, say Rs 25,000 each, would have to report the facts in the ITR, though none of the companies would report the transactions in their AIR, as the subscription amount from that shareholder is less than the monetary limit of Rs 1 lakh. “The disclosure to be made in ITR can thus be more than what is demanded of the AIR filed by the company or bank in Form 61A, and this would put the taxpayers to much strain,” says Mr Subramani. “Also, the taxpayer would have to aggregate all his savings account transactions in multiple banks for reporting in the ITR though Section 285BA read with Rule 114E does not warrant such an exercise.” D. Murali

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

3540 Views Comment Share Income Tax Report

News posted by

CCI News Desk

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

Comments