Annual Information Return under Income Tax Act

Section 285BA of the Income Tax Act, 1961, read with Rule 114E of the Income Tax Rules 1962, mandates the filing of Annual Information Return (AIR) in respect of specified financial transactions carried out during the period from 01/04/2015 to 31/03/2016 upto 31^st day of August 2016.Following class of companies are required to file Annual Information Return:

S.No (1)	Class of Person (2)	Nature and Value of transaction (3)
1.	A Company or institution issuing bonds or debentures.	Receipt from any person of an amount of Rs 500,000/- or more for acquiring bonds or debentures issued by the Company or institution.
2.	A Company issuing shares through public or rights issue.	Receipt from any person of an amount of Rs 100,000/- or more for acquiring shares issued by the Company.

Penalty for failure to furnish statement of financial transaction or reportable account

• Section 271FA– If a person who is required to furnish return under section 285BA, fails to furnish such  return within the time prescribed (i.e. 31^st August of the following Financial year), the income-tax authority may direct that such person shall pay, by way of penalty, a sum of Rs. 100/- for every day during which such failure continues.
• Provided that where such person fails to furnish the return within the period specified in the notice issued under sub-section (5) of section 285BA, he shall pay, by way of penalty, a sum of Rs. 500/- for every day during which the failure continues, beginning from the day immediately following the day on which the time specified in such notice for furnishing the statement expires.
• NOTE: Due date &  amount of penalties for filing Annual Information Report for A.Y 2017-18  have been change

New Annual Information Statement (AIS) is extended version of 26AS

• The new Annual Information Statement (AIS), which provides full information to a taxpayer for a specific financial year, was recently published by the Income Tax Department on the Compliance Portal. It contains data on taxpayers’ earnings, financial activities, tax details, and Income Tax proceedings, among other things. It also takes comments from assessees on the data presented in the AIS.
• For each type of information, such as SFT, TDS, and so on, AIS presents both reported value (value submitted by reporting organisations) and modified value (value after incorporating the assessee’s feedback).

What is Objectives of the Annual Information Statement

Basic objectives of introducing the Annual Information Statement are:

• Preventing non-compliance.
• Encouraging voluntary compliance and facilitating seamless prefilling of return.
• Showing complete information to the assessee with a facility to provide online feedback.

Checking AIS is mandatory Before Filing your ITR Returns

• In order to promote transparency and simplifying the tax return filing process, CBDT vide Notification dated May 28, 2020 has amended Form 26AS vide Sec 285BB of Income Tax Act, 1961.
• The new Form 26AS is an Annual Information Statement or AIS which will provide a complete profile of the taxpayer for a particular year.
• Tax Dept has announced roll-out of a new statement – AIS . Annual Information Statement provide you all information about your transactions related to financial during the FY.

Relief for Income Tax Taxpayer, Annual Information Statement data Not to be used for Tax Calculation says CBDT

• Tax Dept has rolled out the new Annual Information Statement (AIS) on the Compliance Portal which provides a comprehensive view of details to a income tax taxpayer with a facility to capture online feedback.
• New AIS includes additional information relating to interest, dividend, securities transactions, mutual fund transactions, foreign remittance information etc.
• The reported information has been processed to remove duplicate information. Income tax Taxpayer will be able to download Annual Information Statement details in PDF, JSON, CSV formats.
• “Amid concerns raised by some tax professionals on social media over alleged discrepancies related to stock sale and purchase data of assessees on newly-introduced AIS, CBDT has said that Annual Information Statement data is not being used for suo moto tax liability calculation as of now.
• Experts have pointed out that Annual Information Statement is disclosed pledged shares as sale of shares, an entry which will enhance tax liability.
• They have also said that data on sale/purchase of shares is showing the day’s closing prices rather than prices at which the sale/purchase was executed.
• Clarifying the points, a top official from Central Board of Direct Taxes  told Fortune India, “The equity data being reflected in Annual Information Statement is based on inputs from depositories.”
• “The data is just there to make the tax payer aware about transactions that have been reported to the tax department by depositories and other third parties.
• We are not taking those transactions into account for pre-filling income tax return forms or calculating capital gains, etc, as of now, as it is a third party data,” the official added. “No tax liability computation will be done based on the data,” the official pointed out.
• From Media official information also said that AIS gives an option in the drop-down menu for raising a red flag on data sourced from third parties.”
• New Income Tax Portal has several errors while processing income tax returns & this is the 1^st Year of Annual Information Statement.
• Many income tax Taxpayers are worried about wrong information captured and automatic notices may be send by income tax dept without verification of the data collected from the 3^rd party.
• Lot of People because of Annual Information Statement are reporting translations in Shares this year as they have no choice than to disclose the transactions and pay capital gains.