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 depositories to report Capital gain income of assessee’s who are investing in shares or mutual funds.
After depositories 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 listed securities or units of Mutual Funds.
2. All Depositories as defined in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996(22 of 1996) 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 depository (e.g. end of day price). The taxpayer will be able to modify the sales consideration before filing the return.
6. First in First out (FIFO) method should be used for identification of corresponding credit in demat account 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 depository. The cost of acquisition can be estimated as per the closing rate on the date (T-2) of transaction for market purchase.
8. The estimated cost of acquisition is to be taken as NIL for OFF Market purchase, IPO or Corporate Action or for any transaction through other than Exchange. The taxpayer will be able to modify the cost of acquisition before filing the return.
9. For shares purchased before 01.02.2018, depositories also have to calculate cost based on the method prescribed under section 55 of the Income Tax Act.
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.
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