ITR Filing New Rule: Now it is necessary to file returns on more than 10 lakh investments in the stock market, know the rules here

ITR Filing New Rule: Have you missed filing return (ITR) for FY 2022? Do not panic, you have a chance to file ITR (Income Tax Return) with penalty by 31st December 2022. If you are an investor and deal in shares and securities in the stock market, then it is necessary for you to file returns. 

As per Income Tax rules, if your investment in Mutual Funds, Stocks, Bonds or Debentures exceeds Rs 10 lakh in a financial year, then you will have to file your income tax return. This information will have to be given to the tax department. Experts say that the Income Tax Department knows everything about these high-value transactions recorded on your behalf whether you inform the department yourself or not.

ITR on investment above Rs 10 lakh 

CA Manish Gupta says if your investment in mutual funds, stocks, bonds or debentures is more than Rs 10 lakh in a financial year, then you have to inform the department in your income tax return. Even if a taxpayer tries to hide such investments from the Income Tax Department, he will not be able to do so. This is because the details of such investments will automatically appear on the Income Tax portal in the taxpayer’s Annual Information Statement (AIS) and Form 26AS and the same will be communicated to the department.

Notice may come under section 143 and 148,

says Manish Gupta, if a person does not file his ITR or does not give correct information about the investment as per the requirement, then the tax department can initiate penal action. Investors/taxpayers can obtain notices under sections 143 and 148 of the Income Tax Act. By issuing a notice, the department can ask the taxpayer for different details about such investments such as what is the source of funds to be used for making such investments.

Ways to evade income tax notices:

Taxpayers/Investors often avoid showing their source of income or show less income in ITR to reduce their tax liability, then give complete details of their financial transactions. It is with the IT department. Therefore, it would be better to properly disclose all the sources of your income and investments while filing the Income Tax Return. In such a situation, in order not to get notice on investment in shares or securities, some important things should be kept in mind.

  • You should file your ITR before the due date.
  • You should cross-check all TDS entries and verify whether the high value transactions reported in your Form 26AS are correct.
  • You should verify AIS before filing your ITR.
  • If your investment amount during a financial year is more than Rs 10 lakh then you should give full details of your investment in shares and securities.
  • You should ensure that the tax liability, if any, is calculated correctly and tax is paid on such transactions.
  • You should keep a record of all your high value financial transactions, investments and expenses.

Tax Department’s e-Campaign for Compliance

CA Manish Gupta says, “In order to promote voluntary compliance of tax laws, the Income Tax Department has launched an e-campaign for the convenience of the taxpayers.”

The campaign is focused on taxpayers who do not file returns or have discrepancy/mismatch in their income statement. Under this e-campaign, the tax department has sent email or SMS after verification based on the information received from various sources like SFT, TDS, TCS etc.

On receipt of such information, the taxpayer should give feedback even if he has filed his return correctly. With this, taxpayers can avoid notice in future. If the department is not satisfied with the reply of the taxpayer on the e-campaign communication, it will process the tax return and issue notice to him under section 143(1). On receipt of such notice, he has to pay additional tax liability on high value transactions.