Capital gain details to be submitted by Mutual funds houses under SFT for pre-filled ITR

Pre-filled ITR’s was the major agenda during Budget 2021, and finance ministry has taken various steps in that direction.

 

Earlier we had seen CBDT releasing instructions for collecting SFT details related to dividend and interest income and now CBDT has released instructions for reporting of Mutual Fund Transactions by Registrar and Share Transfer Agent.

 

After Registrar and Share Transfer Agent submit this SFT details, the assessee would get a pre-filled ITR with the details of capital gain income earned by assessee.

 

Some of the important points mentioned in this rule are as under:

1. For the purposes of pre-filling the return of income, CBDT has issued Notification No. 16/2021 dated 12.03.2021 to include reporting of information relating to Capital gains on transfer of units of Mutual Funds.

 

2. All Registrar and Share Transfer Agents (RTA) are required to prepare the data file in prescribed format from their internal system.

 

3. The statement of financial transactions relating to Financial Year 2020-21 shall be furnished on or before the 31st May 2021. Thereafter, the statement of financial transactions relating to the quarter ending 30th June, 31st September, 31st December and 31st March shall be furnished on or before 25th of July, October, January and April respectively.

 

4. In case of a minor, details of legal or natural guardian (PAN, Name etc.) may be provided.

 

5. The Estimated Sale Consideration for the debit transaction should be determined on the best possible available price of the asset with the RTA. In case the sale consideration related to a sale/transfer is not available, Redemption Offer Price (Exit Load adjusted NAV) on the date of sale/transfer may be taken. The taxpayer will be able to modify the sales consideration before filing the return.

 

6. The period of holding (difference between date of sale and date of acquisition of any security) should be used to classify the asset as short term or long-term asset. First in First out (FIFO) method should be used for identification of corresponding purchases and computation of period of holding.

 

7. The estimated cost of acquisition for the credit should be determined on the best possible available price with the RTA.

 

8. In case the cost of acquisition related to a credit/transfer is not available, NAV for the end of the day of the credit may be taken. The taxpayer will be able to modify the cost of acquisition before filing the return.

 

9. For equity oriented mutual fund purchased before 01.02.2018, RTA also have to calculate cost based on the method prescribed under section 55 of the Income Tax Act.

 

Also, depositories have to report on mutual fund transactions which have been entered through them as was mentioned in earlier notification for capital gain income.

 

Hence, based on the above information it looks like all the details related to income from capital gain will be pre-filled in the Income tax return of assessee, which will be a major income for many people during this period as number of people who are investing in stock market have increased over the last few years especially due to the pandemic.

 

However, it is advisable to not rely on this information completely and also take assistance of a tax expert for the same or else you might end up paying higher tax or not taking proper benefit of loss if any incurred.

 

To read full notification CLICK HERE.

 

If you need any assistance with filing of Income tax return book you consultation today with experts. To book CLICK HERE.