TAKE CARE OF YOUR TRANSACTIONS WHICH ARE TO BE REPORTED BY OTHERS IN ANNUAL INFORMATION AND REPORTABLE TRANSACTIONS REPORT UNDER S.285BA OF INCOME TAX ACT

[CA DEV KUMAR KOTHARI]

Relevant links and references:

Section 285BA of Income-tax act, 1961

Relevant Rule 114E

 Form 61A

About reporting parties:

Banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies

 banking institution referred to in section 51 of the  Banking Regulation Act, 1949 (10 of 1949)

Any other company or institution issuing credit card.

Post Masters

A trustee of a Mutual Fund – means all type of   Mutual Fund of the Trustee shall be covered and not type or scheme wise..

Authorised person as referred to in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).

Registering Authorities.

Listed companies to whom you have offered shares in buy-back offer.

Parties to whom you had made payment in cash for purchase of goods and service.

Companies to whom you have made payment for shares acquired by you.

Scope of this article:

Scope of this article is restricted from the point of view of any assessee for which a transaction can be reported by any other entity who need to report a transaction.

Care required:

During last decade time available for filing of Return of Income has been reduced considerably from time to time. Now penalty provision for delayed filing of return is also a serious concern. Therefore one has to be more prompt and careful in collection and compilation of information for preparation of return of income. This requires that all bank accounts, deposits of all kind, party accounts, depository accounts, investment accounts, property held, acquired or transferred, tax deductible from receipts and credits in favour of assessee etc. are compiled and reconciled with account with concerned party and also tallied with information available on related websites as far as possible.  

Transactions reported by other persons in annual information return, reported transactions as well as return of TDS  / TCS are important tools in hands of income-tax department to correlate transactions with PAN furnished. In case PAN is not furnished and transaction is of substantial amount, it is likely that income tax department will make enquiry about the same.

Therefore any mistake of omission of such transaction while preparing accounts, computation of income and income tax return can be a costly affair. Because an amount of income or any receipt which can be considered as income or  deemed income can be a source to impose tax, interest and penalty by income tax department.

Some information are available on website of income tax department through m/y account. These must be checked. However, information available  can be incomplete because of delay on part of  parties furnishing such information. For example, a person paying to you or crediting your account can delay or commit a mistake in reporting of TDS/ TCS.

Therefore, own information should be relied as far as possible. For example, in case you do not find a credit of TDS in From 26AS which was made or was to be made ( based on credit for your bill) by any concerned party from whom you received payment or have to receive payment, then you must contact the party and request to comply TDS requirements. Even if the party delays and you are filing return you must consider income and TDS in your return of income.

Therefore sincere advise to all is that ‘take care of your all  transactions and do not ignore any transaction  which may be reported by others in annual information and reportable transactions report under to be submitted by them under section .285BA.

Simplified analysis of information to be furnished by others which can have a bearing on your case::

In this regard an attempt is being made to put such reportable transactions in a simplified manner by reproducing relevant portion of Rule and nature of transactions by highlighting provisions and inserting remarks for easy understanding:

Income-tax Rules, 1962

²[114E. Furnishing of statement of financial transaction.-

(1) The statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in respect of a financial year in Form No. 61A and shall be verified in the manner indicated therein.

(2) The statement referred to in sub-rule (1) shall be furnished by every person mentioned in column (3) of the Table below in respect of all the transactions of the nature and value specified in the corresponding entry in column (2) of the said Table in accordance with the provisions of sub-rule (3), which are registered or recorded by him on or after the 1st day of April, 2016, namely:-

TABLE

Sl.No.	Nature and value of transaction	Class of person (reporting person)	Remarks	Action needed
(1)	(2)	(3)
1.	(a) Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque of an amount aggregating to ten lakh rupees or more in a financial year. (b) Payments made in cash aggregating to ten lakh rupees or more during the financial year for purchase of pre-paid instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007). (c) Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating to fifty lakh rupees or more in a financial year, in or from one or more current account of a person.	A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act).	Limit Rs.Ten lakh Purchase in cash of these DD, PO, MC,BC and similar instruments by whatever name called from any bank and from any branch of a bank will be reported if total cash payment for such purchase of instruments reached ₹ 10 lakh in FY 2016-17 onwards. All branches of a bank will be covered and aggregated. However, one bank cannot report for another bank, therefore aggregation will be bank wise.	Check your transactions of buying DD/ MC/BC etc.
2.	Cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.	(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).	Limit ₹ 10 lakh Apply to saving account, recurring deposit. Exemption is for current account. Time deposit  is covered by another reportable  item.	Check your cash deposits
3.	One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to ten lakh rupees or more in a financial year of a person.	(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898); (iii) Nidhi referred to in section 406 of the Companies Act, 2013 (18 of 2013); (iv) Non-banking financial company which holds a certificate of registration under section 45-IA of the Reserve Bank of India Act, 1934 (6 of 1934), to hold or accept deposit from public.	Limit Rs. ten lakh. Deposits made in cash, Cheque, DD,PO. MC transfer from bank account by cheque, RTGS, NEFT , simple transfer  will be covered. Renewal of time deposit  to make a new time deposit will not be covered.	Check you time deposits.
4.	Payments made by any person of an amount aggregating to- (i) one lakh rupees or more in cash; or (ii) ten lakh rupees or more by any other mode, against bills raised in respect of one or more credit cards issued to that person, in a financial year.	A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act) or any other company or institution issuing credit card.	Payment made  to credit card issuer Cash Rs.one lakh Other modes Rs. ten lakh.	Check your cash payments and other payments to  credit card issuers.
5.	Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring bonds or debentures issued by the company or institution (other than the amount received on account of renewal of the bond or debenture issued by that company).	A company or institution issuing bonds or debentures.	Limit Rs. ten lakh. Receipt    in any manner except renewal of old security will be covered.
6.	Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring shares (including share application money) issued by the company.	A company issuing shares.	Limit ₹ 10 lakh Receipt    in any manner will be covered. It can be cash, cheque, conversion of old securities, conversion of loans. One can argue that if money was received in earlier year  need not be reported but that will cause difference in return of allotment and transaction reported- a cause of enquiry and investigation.	Check your payments for issue of shares – application, allotment and call money.
7.	Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to ten lakh rupees or more in a financial year.	A company listed on a recognised stock exchange purchasing its own securities under section 68 of the Companies Act, 2013 (18 of 2013).	Limit Rs. ten lakh Buy back by listed companies	Check if you have offered any shares in buy back
8.	Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring units of one or more schemes of a Mutual Fund (other than the amount received on account of transfer from one scheme to another scheme of that Mutual Fund).	A trustee of a Mutual Fund or such other person managing the affairs of the Mutual Fund as may be duly authorised by the trustee in this behalf.	Limit ₹ 10 lakh. Actual receipts in any manner cash / bank Conversion. Renewal etc. of old instrument in new instrument will not be covered.	Check your investments in mutual funds.
9.	Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through issue of travellers cheque or draft or any other instrument of an amount aggregating to ten lakh rupees or more during a financial year.	Authorised person as referred to in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).	Rs. ten lakh. For foreign currency in various modes.	Check your purchases of foreign exchange, purchases , payments and  spending in foreign currency.
10.	Purchase or sale by any person of immovable property for an amount of thirty lakh rupees or more or valued by the stamp valuation authority referred to in section 50C of the Act at thirty lakh rupees or more.	Inspector-General appointed under section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act.	₹ 30 lakh- valuation by stamp authority  payment in any mode.  Reporting will cover both vendor/ transferor  and buyer both. In case of joint ownership of vendor and buyer reporting will be for all joint vendor/ buyer.	Check acquisition and transfer of immovable properties registered and valuation made by stamp authority/
11.	Receipt of cash payment exceeding two lakh rupees for sale, by any person, of goods or services of any nature (other than those specified at Sl. No. 1 to 10 of this rule, if any.	Any person who is liable for audit under section 44AB of the Act.	Rs. two lakh for  goods and services from any person by a person who is required to get a tax audit report.	Check payments you made for purchase of goods and services.
5[12.	Cash deposits during the period 09th November, 2016 to 30th December, 2016 aggregating to - (i) twelve lakh fifty thousand rupees or more, in one or more current account of a person; or (ii) two lakh fifty thousand rupees or more, in one or more accounts (other than a current account) of a person.	(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).]	Limit ₹ 12.5 lakh in current account. Rs.2.5 lakh in any account  e.g. saving account, fixed deposit, recurring deposit  etc. (other than current account for which separate limit of ₹ 12.5 lakh is provided). This is for during  demonetization period, as popularly called.	Check your cash deposits during demonization   period, in all bank branches of a bank and each bank separately.
7[13.	Cash deposits during the period 1st April, 2016 to 9th November, 2016 in respect of accounts that are reportable under Sl.No.12.	A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).]	No limit is prescribed  therefore, any amount of cash deposit will be reported in relation to persons for whom reportable transaction is found for demonetization period ( sl.no.12) If there is no reportable transaction vide serial no. 12, then any amount of cash deposits made during 01.04.16 to 09.11.16 will not be reported.	If there is any reportable transaction  under serial no. 12 for demonatization period,. then check all cash deposits in bank that has a reportable transaction from 01.04.16 to 09.11.16 – any cash  amount deposited  is required to be reported by bank.

(3) The reporting person mentioned in column (3) of the Table under sub-rule (2) ⁴[(other than the persons at Sl.No.10 and Sl. No. 11)] shall, while aggregating the amounts for determining the threshold amount for reporting in respect of any person as specified in column (2) of the said Table,-

(a) take into account all the accounts of the same nature as specified in column (2) of the said Table maintained in respect of that person during the financial year;

(b) aggregate all the transactions of the same nature as specified in column (2) of the said Table recorded in respect of that person during the financial year;

(c) attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons, in a case where the account is maintained or transaction is recorded in the name of more than one person;

(d) apply the threshold limit separately to deposits and withdrawals in respect of transaction specified in item (c) under column (2), against Sl. No. 1 of the said Table.

Conclusion:

As stated earlier, in this article requirement and desirability to ascertain transactions which can be reported by other parties have been examined so that there remain no omission in reporting of any income or expenditure or investment or disinvestment etc. relating to you.

Other procedural aspects concerning reporting entities are not considered.