Subject to the limits prescribed for various investments and payments, the respective financial institution is required to report the transactions to income tax authorities in a prescribed format
Is there a single document that summarizes all my investments and tax outflow, if any? If I continue my current investments, will I have to pay additional tax in FY22 with regard to the long-term capital gains limit of ₹1 lakh or is it applicable only if I sell anything and when I sell it? I don’t intend to sell or stop my current SIPs (systematic investment plans). What will the tax implications be in the short term and long term, i.e., when I actually need money and have to sell or I cannot continue my SIP due to other factors?
Subject to the limits prescribed for various investments and payments, the respective financial institution is required to report the transactions to income tax authorities in a prescribed format. The said information is accordingly reflected under Part E of your Form 26AS.
In the case of mutual fund investments, fund houses are required to report the transaction details where they are in receipt of an amount aggregating to ₹10 lakh or more in a financial year for acquiring units of one or more schemes of a mutual fund (other than the amount received on account of transfer from one scheme to another of that fund house).
Accordingly, in your case, if the mutual fund investments exceed the said threshold, the details should reflect in Part E of your Form 26AS.
However, in case of investments below this limit, the same may not appear in Form 26AS and you may need to obtain the required details from your brokers or agents or bank accounts as the case may be.Also, please note that as per a recent notification of the tax authorities, for the purpose of pre-filling returns of income, details of capital gains on the transfer of listed securities or units of mutual funds, dividend income, interest income, etc. are also required to be furnished by stock exchanges, depositories, clearing houses, etc.
Further, where any tax payment is made under your PAN through taxes deducted at source (TDS) or taxes collected at source (TCS) or advance tax or self-assessment, the details of all such tax payments shall also reflect under respective sections of your Form 26AS.Capital gains tax is not triggered merely by making the investments. Capital gains tax on investments would only trigger upon transfer (sale/redemption) of the investments.
When you actually sell the investments, depending on the type of investment (equity/debt) and the holding period of such investment, capital gains (either short-term or long-term) and the taxes would need to be computed and discharged as per the provisions prescribed in this regard.
As all the transactions may not reflect in your Form 26AS, you may need to obtain the required details from your brokers or agents or bank accounts as the case may be.
Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India.
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