The Ministry of Finance has cleared the air on the issue of purported Statement of Financial Transactions (SFT) expansion issue, saying there's no proposal to modify income tax returns forms. The department officials say taxpayers need not mention high-value transactions in their return as it's done by third parties under the Income Tax Act.
These third parties bring forth the names of those who spend big money on various items such as business class and foreign travels, expensive hotels, children's school fees and do not disclose income tax returns as they claim their annual income to be less than Rs 2.5 lakh per annum.
Under the Act, people need to provide Aadhaar or PAN details before carrying out high-value transactions, which then is reported by the third parties to the I-T department. An I-T department official told India Today, data from third parties was crucial since the department relies on the voluntary filing of ITRs and they help in finding out tax evaders.
After receiving data from third parties, the I-T department uses data analytics and artificial intelligence to identify tax evaders or those hiding income.
The Income Tax Department currently receives information like cash deposit/withdrawal from saving bank accounts, sale/purchase of immovable property, credit card payments, purchase of shares, debentures, foreign currency, mutual funds, among others from third parties or "specified persons" like banks, mutual funds, institutions issuing bonds and registrars or sub-registrars.
In 2020-21 Budget, the government revised the format of Form 26AS, stating all such information from different SFTs would be shown in the new Form 26AS. It is an annual consolidated tax statement that can be accessed from the income-tax website by taxpayers using their permanent account number (PAN).