The Central Board of Direct Taxes (CBDT) has released specific instructions for banks and businesses to follow when reporting details on taxpayers' interest and dividend income. The aim is for the tax department to be able to provide taxpayers with pre-filled details on tax forms. The finance minister declared in the Union Budget 2021-22 that taxpayers would receive details on capital gains and dividends pre-filled in their tax forms. The Central Board of Direct Taxes (CBDT) has published the Format, Procedure, and Guidelines for filing Statements of Financial Transactions (SFT) for Dividend Income.
Now banks will have to report the details of all taxpayers whose interest income across deposits exceeds Rs 5,000 in a fiscal year, according to the notification issued on Tuesday.
The interest income received by the account holder will be reported by the banks through all bank accounts, including savings accounts, recurring accounts, and fixed deposits.
Interest earned on PPF, non-resident foreign currency accounts, resident foreign currency accounts, and Sukanya Sumriddhi accounts, on the other hand, is not needed to be registered.
The gross sum will be reported by banks. They cant provide the Rs 10,000 deduction under Section 80TTA. The deduction can be claimed by the taxpayer by filing a tax return (ITR).
There is no minimum requirement for companies. They will be required to disclose the amount of each shareholder's dividend. The tax department released a circular in March directing a few organizations, including banks, corporations, and brokers, to report to the tax department the interest, dividends, and capital gains received by investors every year.
The CBDT has instructed reporting agencies to provide taxpayers with information on dividend income reported to the Income Tax Department so that they can reconcile the data on the Annual Information Statement (AIS) (Form 26AS).
The financial transaction statement must be given on or before the 31st of May following the financial year in which the transaction is reported or documented, said the notification.