Last Updated on August 18, 2020 at 10:23 am
Recently the income tax department announced a new specified financial transaction (SFTs) that will be reported under form 26 AS. These include life insurance premium, health insurance premium, share transactions among others. Here is a full list of such STFs.
What used to be a simple tax credit statement available to every taxpayer is now a complete blueprint of your high-value financial transactions. We had earlier published the first list of changes announced in form 26AS in July 2020. This article will focus on additional changes and also provide a full list of reportable SFTs.
About the author: Anjesh Bharatiya is a 30+ taxman by profession and a Chemical Engineer by education. He has been an investor in the stock market since age 15! He likes to write about personal finance, stock markets, government policies, taxation, philosophy and football.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
Also by Anjesh: (1) Want to trade in stocks? Here is how your income will be taxed. (2) How to use Tax benefits on HRA and home loans (3) How to get tax benefits under a Hindu Undivided Family (HUF).
On 13th August 2020, the Hon’ble PM unveiled a significant number of tax reforms mainly related to facilitating honest taxpayers through the introduction of a ‘Taxpayers’ Charter’ and focusing on faceless assessments & appeals. Also introduced were a few more changes extending the scope of SFTs (Specified Financial Transactions) which are specified high-value transactional information sourced from Banks, Mutual Funds and other such Financial Institutions and will be reflected in your Form 26AS. These institutions are required to file a report under Section 285BA of the Income Tax Act on certain transactions above a threshold value. The Income Tax Department also specified certain categories of taxpayers who were compulsorily required to file Income Tax Returns.
List of specified financial transactions to be available in Form 26AS
The additional SFTs that will now be reportable and will be visible in the Form 26AS are:
- Payment of educational fees/donations above Rs 1 lakh in a year
- Hotel bills exceeding Rs 20,000
- Purchase of jewellery, white goods, marbles, paintings etc. exceeding Rs 1 lakh in a year
- Life insurance premium payment over Rs 50,000 per annum
- Payment of property tax above Rs 20,000 per annum
- Electricity bill payment above Rs 1 lakh per annum
- Health insurance premium payment above Rs 20,000
- Domestic business class air travel/ foreign travel (threshold limit not yet specified)
- Share transactions/ demat accounts/ bank lockers (threshold limit not yet specified)
The SFT transactions already reportable are:
- Purchase of bank drafts or pay orders in cash (if more than Rs 10 lakh in a year)
- Purchase of pre-paid instruments in cash (if more than Rs 10 lakh in a year)
- Cash deposit in the current account (if more than Rs 50 lakh in a year).
- Cash deposit in account other than current account (if more than Rs 10 lakh in a year).
- Time deposit (if more than Rs 10 lakh in a year).
- Payment for credit card (if more than Rs 10 lakh in a year through non-cash methods. Limit is Rs 1 lakh for cash payments)
- Purchase of debentures (if more than Rs 10 lakh in a year)
- Purchase of shares (if more than Rs 10 lakh in a year)
- Buyback of shares (if the tendered value is more than Rs 10 lakh in a year)
- Purchase of mutual fund units (if more than Rs 10 lakh in a year)
- Purchase of foreign currency (if more than Rs 10 lakh in a year)
- Purchase or sale of immovable property (if more than Rs 30 lakh in a year).
- Cash payment for goods and services (if more than Rs 2 lakh in a year)
- Cash deposits during a specified period of 9th Nov to 30th Dec 2016 (if more than Rs 12.5 lakh in a current account or Rs 2.5 lakh in other accounts)
Compulsory filing of Income Tax Return
The Government has also specified compulsory filing of ITR for the following persons:
- A person having bank transactions over Rs 30 lakh in a year
- A person making payment of rent over Rs 40,000 in a year
- All professionals and businesses having turnover exceeding Rs 50 lakh in a year
The Government has also proposed deduction/collection of tax at higher rates for non-filers of return. The exact details of these measures and dates of implementation will also be notified soon.
Summary: For the Income Tax Department, these measures are aimed at matching consumption and investment patterns of taxpayers with their return profile. The PM exhorted the taxpayers in his speech on 13th August to pay proper taxes after ‘atmachintan’. He also pointed out the abysmally low percentage of taxpayers in India. The PM also said that henceforth, every taxpayer will be considered honest unless proved otherwise. The percentage of returns subjected to tax scrutiny is also coming down every year and all future proceedings will be conducted in a faceless and transparent manner. With this additional information being captured by the Department, the aim is to widen the tax base and it is imperative for taxpayers to properly reflect their transactions in their ITRs.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 7000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 2,500 investors and advisors use this!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)