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Business News/ Money / Personal Finance/  Now all capital gains, dividend and interest earned will be reported to tax dept
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Now all capital gains, dividend and interest earned will be reported to tax dept

The purpose of reporting these transactions is to enable the tax department to provide this information pre-filled in the ITR forms to the taxpayers as announced in the Budget speech of 2021 by the finance minister. There is no ceiling prescribed for reporting such transactions

It is never a good idea to borrow money to save taxesPremium
It is never a good idea to borrow money to save taxes

NEW DELHI: Enhancing the scope of Specified Financial Transactions (SFTs), the Central Board of Direct taxes issued a circular on 12 March to include capitals gains arising from sale of mutual funds and shares, dividend received on shares, as well as interest earned from bank and post office savings or deposits with non-banking financial transactions.

Certain entities including financial institutions such as banks, mutual fund houses, registrars, bond issuers, among others, are required to report transactions beyond a specified limit in the financial year to the tax department. These transactions are known as specified financial transactions (SFTs) under the 114E of the Income Tax Act 1962.

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With this, stock exchanges, companies, mutual fund houses, post offices, banks etc will have to provide information to the tax department.

So, if you have earned capital gains by selling your mutual fund units, the same will be reported by the fund house to the tax department. Interest earned on bank or post offices deposits will also be reported to the tax department.

Till now, only high-value transaction such as cash deposited to saving bank accounts, purchase of shares, debentures, mutual funds, buyback of shares worth more than 10 lakh on an aggregate basis during a financial year, credit card payments of 1 lakh or more in cash or in any mode of 10 lakh or more during a financial year, were reported. There are around 16 such transactions.

Providing information related to capital gains, dividend and interest income will help the tax department give prefilled information in the tax forms to the taxpayers.

"The purpose of reporting these transactions is to enable the tax department to provide this information pre-filled in the ITR forms to the taxpayers as announced in the Budget speech of 2021 by the Finance Minister. There is no monetary ceiling prescribed for reporting these transactions. Therefore, each and every transaction will be reported to the tax department and the same will be provided pre-filled to the taxpayers for ease of filing Income-tax returns," said Tarun Kumar, a Delhi-based chartered accountant

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Published: 15 Mar 2021, 12:51 PM IST
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