Beginning this financial year, the income tax department will have direct access to details of capital gains made, dividends received and interest earned by investors, which is expected to plug under reporting or non-declaration of such income.
A notification issued by the I-T department on March 12 has included stock exchanges, depositories, clearing corporations and registrars to an issue and share transfer agents among intermediaries that will be required to submit information on capital gains made on listed securities and mutual funds.
It requires companies to provide details of dividends paid while banks, post offices and nonbanking finance companies must submit information on interest earned.
This notification came into force with immediate effect, which means the tax department will have access to information for the just concluded FY21, which can be matched with income tax returns filed by taxpayers. The tax department will also share this information with taxpayers.
Finance minister Nirmala Sitharaman had announced in her budget speech in February that to further ease the filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, the post office, etc. will also be pre-filled in tax forms for taxpayers.
Long-term capital gains on shares and mutual funds in excess of ₹1 lakh a year is taxable. Dividends, interest and short-term capital gains are added to income and taxed at the marginal rate applicable to the tax payer. So far, taxpayers had been required to compute and declare capital gains, dividend income and interest earned along with any other untaxed income while filing tax returns.