Individuals who have earned capital gains on investments need to mandatorily declare it when filing their income tax return. Those who do not disclose it may get into trouble. Here's why
Non-declaration of such capital gains can get you into trouble from the current financial year. (Photo: Pixabay/Representational image)
New Delhi,UPDATED: Apr 5, 2021 18:10 IST
Income tax officials will have direct access to information related to capital gains from the sale of mutual funds, dividends received on shares and interest earned by investors on bank and post office savings/deposits starting from the current financial year.
Non-declaration of such income can get you into trouble as taxmen will have complete access to any capital gains you have made.
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In a notification issued last month, the income tax department asked stock exchanges, depositories, clearing corporations and registrars to issue and share transfer agents among intermediaries that will be required to provide details of any capital gains made on listed securities and mutual funds.
It may be noted that companies are also required to provide information on dividends paid, while banks, post officers and NBFCs need to give detail of interest earned.
WHAT DOES IT MEAN?
This simply means that if an investor has redeemed mutual fund units and earned capital gains on them, the information will be reported by the fund house to the tax department.
The same applies to interest earned on bank or post office deposits; the information will be passed on to the tax authorities. The income tax department will share all the information with the taxpayers as well.
It is worth noting that Finance Minister Nirmala Sitharaman had announced that the process of filing income tax return will be eased and details such as capital gains, dividend income interest from banks and post offices will be pre-filled in tax forms for taxpayers.
As of now, long-term capital gains on shares and mutual funds that exceed more than Rs 1 lakh per year falls under the taxable category. Capital gains such as dividends, interest and short-term capital gains are included under income and taxed at the rate applicable to the taxpayers.
Such information was not sought by the tax department earlier for all cases. However, the notification makes it clear that the tax department will now collect capital gains data for all taxpayers.
In case the tax department finds a discrepancy or underreporting of capital gains, a notice is likely to be sent to the taxpayer.
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Published By:
Koustav Das
Published On:
Apr 5, 2021
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