CBDT amends Income Tax Rules to set up Taxpayer Data Collection [Read Notification]

The Central Board of Direct Taxes ( CBDT ) amended the Income Tax Rules to set up taxpayer data collection.

The change brought out by the Income Tax (4th Amendment) Rules, 2021, is effective from 12th March, 2021.

The sub-rule 5A inserted by the Income-tax department for the purposes of pre-filling the return of income, a statement of a financial transaction relating to capital gains on transfer of listed securities or units of mutual funds, dividend income, and interest income.

The idea is to get information about large transactions by the taxpayer that will be used in preparing pre-filled income tax returns, an initiative the government is betting on to improve tax compliance and convenience of filing Income Tax Returns.

The banks, stock exchanges, and companies will have to share data on large investor transactions with the Income Tax Department as frequently as sought by a designated official, according to rule change notified by the Income Tax Department. Presently, these entities were only mandated to give a statement of financial transactions by their clients on or before 31 of May following the end of the financial year in March.

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