GUIDELINES TO BANKS TO REPORT TAXPAYERS INTEREST INCOME: CBDT

• Exempted Income tax income under the Income Tax Act 1961 like interest on PPF account etc need not be reported.
• The CBDT published detailed guidelines for reporting information on taxpayers' interest & dividend income from banks and companies.
• The “specified reporting person" is required to file the financial transaction statement as specified in Rule 114E & section 285BA of the income tax act 1961. all taxpayers whose interest income over deposits exceeds INR 5K in the FY are to be reported by banks.
• There is no minimum limit for companies. Details of the dividend paid to each shareholder must be reported. Above circular to report the interest, dividends & capital gain earned by investors annually to the tax dept by some companies including banks & brokers.
• This is aimed of this is to enable the tax department to provide taxpayers with pre-filled information in tax forms. Taxpayers will be provided with information regarding capital gains & dividends in their tax formats pre-filled (The Finance Minister announced in the Union Budget 2021-22.
• The guidelines help to ensure that the entities report consistently. The reporting bodies must prepare the data file in the prescribed format from their internal system.
• The statement of financial transactions shall be furnished on or before 31 May, immediately following the FY in which such transaction is recorded or registered,
• The statement is signed by the specified designation director of the bank who is verified & submitted.
• The banks shall report on their accounts, including recurring accounts, savings account, & fixed deposits, the interest income earned by the bank account holder. But there is no requirement to report any interest earned in a non-resident foreign currency account, PPF, Sukanya Sumriddhi A/c and a resident foreign currency account.
• The gross amount is to be reported by banks. you can't deduct INR 10k as per section 80TTA. the taxpayer can claim the deduction under section 80TTA By filing the income tax return,
• In the case of joint account holders case, The interest paid or accumulated is assigned to the primary or first-account holder.
• In case the bank account is in the name of the minor, the name & PAN of the legal guardian will be reported.

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