Beginning from this Financial Year 2021-22, Income Tax Department will have direct access to the 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 or deposits, which is likely to seal revenue leakage and check non-declaration of such incomes.
Last month on 12th March 2021, IT Department has issued a notification in this regard, emphasising that stock exchanges, depositories, clearing corporations and registrars to an issue and share transfer agents among intermediaries that will be required to provide details of capital gains made on listed securities and mutual funds.
Companies are required to provide information on dividends paid while banks, post offices and non-banking finance companies (NBFCs) must give details on interest earned. If an investor has redeemed mutual fund units and earned capital gains, the same information will be reported by the mutual fund company to the tax department. Furthermore, interest earned on bank or post office deposits will also be informed to the tax authorities.
More importantly, tax authorities will have details for the just ended financial year (2020-21), which can be verified against income tax returns filed by taxpayers. Also, the income tax department will share this information with taxpayers.
In Union Budget 2021-22 government had announced easing the filing of returns and details such as capital gains, dividend income interest from banks and post offices will be automatically filled in tax forms for taxpayers.