Tuesday 3 May 2016

FAQs on Annual Information Report (AIR) caused Sending of Notices by Income Tax Department

FAQ 1: How Income Tax Department get to know about our transactions?

Every one want to keep distance from Income Tax Department but due to the following expenses and investments, which at any point of time performed by you may invite undue attention of the Income tax Department.

S. No.
Cash Deposits in Saving Bank Account
Aggregating to Rs. 10 Lakhs P.a.
Cash Deposits or withdrawals in one or more current account.
Aggregating to Rs. 50 Lakhs or more
Receipt of Cash Payment for sale of any goods/ services
Exceeding Rs. 2 Lakhs
Purchase / Sale of any Immovable Property
Exceeding Rs. 30 Lakhs
Making Credit Card Payments
More than Rs.2 Lakhs p.a.
Investment in Shares
More than Rs. 1 Lakh
Investment in RBI Bonds
More than Rs. 5 Lakhs
Investment in Mutual Fund Units
More than Rs. 2 Lakhs
Investment in Debentures/ Bonds
More than Rs. 5 Lakhs
Investment in Gold ETF
More than Rs. 1 Lakh

FAQ 2: How does the Income Tax Department get to know about all these activities?

The IT Department has developed a statement of financial transactions called Annual Information Report (AIR) through which they get to know about all the transactions entered by you and on the basis of this report, the Income Tax Department shortlists their targets and further sends them a notice.

FAQ 3: What do you mean by Annual Information Report?

Annual Information Return (now called as statement of financial transaction or reportable account) of ‘high value financial transactions’ is required to be furnished under section 285 BA of the Income-tax Act, 1961 by ‘specified persons’ in respect of ‘specified transactions’ registered or recorded by them during the financial year.

FAQ 4: Who furnished Annual Information Return to the Income tax Department?

Sr. No.
Class of Person
Nature and Value of Transaction
A Banking Company
a)   A Cash deposit aggregating to Rs. 10 Lakh or more in a year in any saving account
b)   Cash deposits or withdrawals aggregating to Rs 50 lakh or more in a financial year in one or more Current Account.
Any Institution issuing Credit Card
Payment made by any person against bill raised in respect of credit card issued to that person, aggregating Rs. 2 Lakh or more in the year
A Trustee of a Mutual Fund
Receipt of Rs. 2 Lakh or more for acquiring units of that fund.
A Company or Institution issuing Bonds or Debenture
Receipt from any person of an amount of Rs. 5 lakh or more for acquiring bonds or debentures issued.
A Company issuing shares through public or right issue
Receipt from any person of an amount of Rs. 1 lakh or more for acquiring shares issued by the company.
Registrar or Sub- Registrar appointed under the Registration Act
Purchase and sale by any person of immovable property valued at Rs. 30 Lakh or More
Any person being an officer of RBI
Receipt from any person of an amounts aggregating to Rs. 5 lakh or more in a year for bond issued by Reserve Bank of India
Any other Person
a)   Receipt of Cash Payment exceeding Rs.2 Lacs for sale of any goods/ services.
b)   Investment in Gold ETF worth more than Rs. 1 Lakh.

FAQ 5: How can I trace my High Value Transactions reported under AIR?

The assesse can trace his/ her high value transactions reported under AIR, in their 26AS Report under Part E - AIR Transactions. Any transaction of the assessee which has been categorized as a High Value Transaction, will be reflected therein.

FAQ 6: How to avoid receiving a notice from the IT department?
      1)      File your Income Tax returns on time and correctly.
      2)      Always re-check your Tax Credit with the 26AS statement.
      3)      Disclose all your Taxable as well as Exempt income under the right head in the income tax return.