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AIR : How to avoid Income Tax notices About AIR (Annual Information Return)

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Published on 06 Jan 2020 / In Income Tax

00:33 AIR : How to avoid Income Tax notices About AIR (Annual Information Return)

00:54 2 Techniques Used by Income Tax Department
1. AIR - Annual Information Return
2. SFT - Specified financial transactions

1:42 Introduction of AIR

AIR stands for Annual Information Return that contains information about all high-value transactions that is required to be reported under section 285BA by the ‘specified person’ for ‘specified transactions’ during a F.Y

With the help of this statement, the tax authorities will collect the information on certain prescribed transactions.

This statement of financial transactions contains details of transactions, reportable account maintained/registered/recorded by them during the year. In this manner the income tax department can keep a track of high valued transactions.

2:29 What Precautions should we take to not get our case in scrutiny?

2:35 Cash payments
3:42 Banks or a Co-operative bank.
4:03 A banking company or a cooperative bank or any other company or institution issuing credit card.
4:54 A company or institution issuing bonds or debentures.
5:13 A company issuing shares.
5:46 A company listed on a recognized stock exchange purchasing its own securities under Companies Act, 2013
6:09 A trustee of a Mutual Fund or such other person managing the affairs of the Mutual Fund.
6:38 Authorized person under Foreign Exchange Management.
7:10 Inspector-General or Registrar or Sub-Registrar
7:54 Any person who is liable for audit u/s 44AB.
8:59 A banking Company
9:31 Post Master General

9:41 Scrutiny Selection on The Basis of AIR (SFT) Information
The statement of financial transaction required to be furnished under sub- section (1) of 285BA of income tax act, 1961 shall be furnished in respect of a F.Y. in Form no. 61A and shall be verified in the manner specified therein.

11:37 Consequences of not Furnishing AIR
Penalties will be levied for not furnishing the statement of all financial transactions u/s 271FA. The penalty is Rs. 500 per day of default. However, section 285BA (5) which allows the tax authorities to issue a notice to the person asking him to file the statement within a period of 30 days from the date of receiving the notice.
If he/she fails to file the statement within the allotted time then he/she will face penalty of Rs. 1,000 per day after the date mentioned in notice for furnishing the statements.

12:43 Who is authorized to receive AIR?

• National Securities Depository Limited(NSDL) is authorized by CBDT (Central Board of Direct taxes) to receive AIR. NSDL accepts AIR from all over the country in front offices called TIN Facilitation Centers (TIN-FCs) and online through web-based facility.

• So, AIR is collected by NSDL and forwarded to the Income Tax Department.

13:21 How will transactions of joint parties be provided in AIR?

With respect to transactions related to joint parties:
• Provide separate line item for each party involved in the transaction and mention each transaction separately relating to that party if shares of each party are known;
• Give particular of all the parties involved in joint parties as separate line items and mention the respective transaction against the first named party alone if the shares of the parties involved in joint transaction are undefined.

13:55 Should an entity which is required to file AIR, file a single AIR for the whole organization or can it file separate AIR for each of its branch/regional office?

An entity/enterprise which is required to file an AIR will file only a single report in behalf of the whole organization.

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