Tax Alert! Your share trading, other data will now be with Income Tax Department
Many retail investors trade in equities on a regular basis, resulting in small capital gains or losses. But many of them used to casually ignore mentioning the details in their Income Tax Return (ITR). Due to unavailability of data on capital gains, the Income Tax Department was also not in a position to detect the non-disclosure.
However, things are now going to change as a formal Memorandum of Understanding (MoU) was signed today between the Central Board of Direct Taxes (CBDT) and market regulator Securities and Exchange Board of India (SEBI), via a video conference, for exchange of data between the two organisations.
This will facilitate sharing of data and information on automatic, regular, request and suo moto basis between the two authorities.
In fact, to make disclosure of information on equity and equity related transactions stringent, the Income Tax (I-T) Department had added a new sheet in relevant ITR Forms last year in the midst of the Income Tax Return (ITR) filling session, named Schedule 112 A – From sale of equity share in a company or unit of equity oriented fund or unit of a business trust on which STT is paid under section 112A – while modifying the ITR on July 11, 2019.
In her first Budget, Finance Minister Nirmala Sitharaman had also mentioned that the Form 26AS would contain the data related to capital gain/loss as well and the SEBI will be asked make arrangements to furnish data related to transactions made in equities and equity-oriented schemes of respective PAN holders.
A Data Exchange Steering Group has been constituted for the data exchange initiative, which will meet periodically to review the data exchange status and improve effectiveness of data sharing mechanism.
“The MoU marks the beginning of a new era of cooperation and synergy between SEBI and CBDT,” the CBDT said in a release.