Co-operative Banks and Post Offices to mandatorily report your interest income to the Income Tax Department

Published : 29 Aug 21, 00:00

Income Tax Department requires reporting of your financial transactions by Banks, Post Offices, Stock Exchanges, Motor Vehicles Registrars and others so that it can be traced in your Tax Credit Statement (Form 26AS). These includes cash payments, deposits or receipts for specified purchases or sales of foreign currency, bonds, shares, mutual funds etc. beyond specified limits.

The Central Government on 12 March 2021 further widened the scope of reporting to include interest, dividend and capital gains by the following entities:

Nature of Income	Person Liable to Report
Interest Income	Banks Co-operative Bank Post Office NBFC
Dividend Income	Every Company (Public and Private)
Capital gains arising on transfer of listed securities and units of mutual funds (Long Term and Short Term)	Recognised Stock Exchanges Depository / Clearing Corporation Registrars and share transfer agents

This would mean that all your interest, dividend and gains from trading in shares and mutual funds will be prefilled in your tax statement due to the new reporting requirements. The scope of such reporting is wide in ambit, considering that the type of interest income (NRE or NRO), persons covered (Resident or Non-Resident) or minimum limit / cap has not been prescribed for reporting purposes.

Considering that the manner and frequency of reporting is yet to be notified by the CBDT, greater clarity is awaited on the practical challenges that may arise on the enactment of the above provisions.