26AS - Income Tax Department - merchant transaction entries

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26AS -  Income Tax Department - merchant transaction entries

26AS – Income Tax Department – merchant transaction entries

Dimers, who are not conversant with 26AS, can follow this link.
What are the details in Form 26AS?
The Central Board of Direct Taxes (CBDT) in a statement said the Income Tax Department used to receive information like cash deposit/withdrawal from saving bank accounts, sale/purchase of immovable property, time deposits, credit card payments, purchase of shares, debentures, foreign currency, mutual funds, buyback of shares, cash payment for goods and services.

https://indianexpress.com/article/explained/exp...

I see, so many self created merchant account holders are alerted via replies/posts by other non-merchant account dimers about the IT tax (not GST).
How many guys (including the non-merchant holders) would believe that self created merchant accounts must be closed?

23 Comments  |  
12 Dimers
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If the above is correct, all rent payments app users are in trouble.

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ramadesidime wrote:

If the above is correct, all rent payments app users are in trouble.

yes

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More trouble for those who do not file returns.
ITR Returns is must for those who earn extra bucks thru rentpay/paytmMerchant/walletRotation/etc, better pay some tax too like 1-2k

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caks2006407 wrote:

More trouble for those who do not file returns.
ITR Returns is must for those who earn extra bucks thru rentpay/paytmMerchant/walletRotation/etc, better pay some tax too like 1-2k

Perfect. Every PAN holder must file tax returns, irrespective of the total income per year.

One (he/she) is fine, as long as things are done in legal way.

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ramadesidime wrote:

If the above is correct, all rent payments app users are in trouble.

Yes rent payment method users are at greater risk unlike self merchant app users where you can declare 5% of the recieved as income. Here 100% of the money recieved will be counted as income.

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pikkuboss wrote:

Yes rent payment method users are at greater risk unlike self merchant app users where you can declare 5% of the recieved as income. Here 100% of the money recieved will be counted as income.

Rental yields (min70% of the rental income ) needs to be declared as income.

I just spent some time on merchant account issue.
The chances of forwarding all the transactions by payment gateway company to IT team is not possible. However, the total amount per month/year basis may be possible.
The total amount may be tallied against the bank statement too.
In any case, if the total transaction per year crosses 40L, one may have to close the account (OR register for a company).

What do you guys say?

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There is no issue, if you pay taxes on the additional income you make and have documented everything
You can file ITR 1 and have it included in other income or if doing it on a large scale you can file ITR 3 as a comission agent business and report your returns
However i know of many people, who are trading in millions anually and not even filing tax, problem is for these guys

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ramadesidime wrote:

Rental yields (min70% of the rental income ) needs to be declared as income.

I just spent some time on merchant account issue.
The chances of forwarding all the transactions by payment gateway company to IT team is not possible. However, the total amount per month/year basis may be possible.
The total amount may be tallied against the bank statement too.
In any case, if the total transaction per year crosses 40L, one may have to close the account (OR register for a company).

What do you guys say?

Even if one closes the account, the transactions will still be stored and can be retrieved. As per IT rules, there is some specific time period we need to maintain all the records that goes in our return filing irrespective of active/closed accounts.

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andromeda wrote:

Even if one closes the account, the transactions will still be stored and can be retrieved. As per IT rules, there is some specific time period we need to maintain all the records that goes in our return filing irrespective of active/closed accounts.

6 years

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karanoshan wrote:

There is no issue, if you pay taxes on the additional income you make and have documented everything
You can file ITR 1 and have it included in other income or if doing it on a large scale you can file ITR 3 as a comission agent business and report your returns
However i know of many people, who are trading in millions anually and not even filing tax, problem is for these guys

Additional income in ITR 1 is taxed at same tax slab in which person falls & many people who do this don’t want to pay any tax at all on this additional income.

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Guys IT Dept is improved a lot.
They are reporting every spends over some threshold.

But if you have already done over 40L just prepare a statement with net loss and file itr you will be safe 95%

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My brother went to higher studies.. I’m using his bank accounts and CC for offers. Does this effect? We are not filing any tax as he is not in india. Any suggestions?

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For a rental income to be earned, there needs to be a property. Also there needs to be 2 distinct persons for an income to be earned. Paying oneself doesn’t create an income.

But 26AS doesn’t know that ur paying urself. So incase of a scrutiny, you can show necessary proof. But if you want to avoid hazzles, then better to avoid these things.

Everything said with great risk comes great reward

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shivkumara27663 wrote:

For a rental income to be earned, there needs to be a property. Also there needs to be 2 distinct persons for an income to be earned. Paying oneself doesn’t create an income.

But 26AS doesn’t know that ur paying urself. So incase of a scrutiny, you can show necessary proof. But if you want to avoid hazzles, then better to avoid these things.

Everything said with great risk comes great reward

>>
Everything said with great risk comes great reward
>>
Perfect. Dimers should always make sure that ‘’reward > risk’’

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try_me wrote:

My brother went to higher studies.. I’m using his bank accounts and CC for offers. Does this effect? We are not filing any tax as he is not in india. Any suggestions?

I suggest you to stop using his bank account and ask him to open NRO account.
Also, he needs to file taxes, irrespective of his income level.
There are other things which needs to be done by family members(who pays for his expenses, it could be Govt/parents/brothers etc)

Regarding CC, there are no specific guidelines for the usage or apply for add-on CC (check the tnc of the CC).

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ramadesidime wrote:

If the above is correct, all rent payments app users are in trouble.

Since it is yearly income (70% of total rent paid per PAN card), one can pay rent upto 4L PAN card holder with zero income.

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ramadesidime wrote:

If the above is correct, all rent payments app users are in trouble.

I haven’t come across any person so far who is paying or receiving rents online, the only way IT deptt can track. Most of rent payments in India are still done in cash, except for commercial/official/company rents.

Any Individual whose total annual income is below the minimum taxable limit (presently Rs. 5 Lakhs) is not liable to file ITR. Annual income of 5 Lakhs means an monthly rent of more than Rs. 41000.

Moreover if you start filing income for small amounts, then IT department will in future force you to file Returns every year whether you have any income subsequently or not.

Further data collection and tracking of IT department is still extremely poor. They have not been able to process the return for last financial year so far. They are unable to verify the TDS entries in Form 26AS with their own servers and keep sending erratic notices. Whatever notices are received for merchant transactions/credit card/mutual fund transactions/property transaction are based on random sampling and not on actual tracking with each PAN number.

All these newspaper articles are meant to create panic/fear amongst the tax evaders, but the reality is that Govt does not have the minimum infrastructure and mechanism to enforce tax compliance in the country

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aam_aadmi wrote:

I haven’t come across any person so far who is paying or receiving rents online, the only way IT deptt can track. Most of rent payments in India are still done in cash, except for commercial/official/company rents.

Any Individual whose total annual income is below the minimum taxable limit (presently Rs. 5 Lakhs) is not liable to file ITR. Annual income of 5 Lakhs means an monthly rent of more than Rs. 41000.

Moreover if you start filing income for small amounts, then IT department will in future force you to file Returns every year whether you have any income subsequently or not.

Further data collection and tracking of IT department is still extremely poor. They have not been able to process the return for last financial year so far. They are unable to verify the TDS entries in Form 26AS with their own servers and keep sending erratic notices. Whatever notices are received for merchant transactions/credit card/mutual fund transactions/property transaction are based on random sampling and not on actual tracking with each PAN number.

All these newspaper articles are meant to create panic/fear amongst the tax evaders, but the reality is that Govt does not have the minimum infrastructure and mechanism to enforce tax compliance in the country

>>
All these newspaper articles are meant to create panic/fear amongst the tax evaders, but the reality is that Govt does not have the minimum infrastructure and mechanism to enforce tax compliance in the country
>>
Perfect, that is the reality.

>>
I haven’t come across any person so far who is paying or receiving rents online.
>>

Agreed, but I have mentioned that by keeping in mind about users of rent payment apps who needs quick money.

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ramadesidime wrote:

>>
All these newspaper articles are meant to create panic/fear amongst the tax evaders, but the reality is that Govt does not have the minimum infrastructure and mechanism to enforce tax compliance in the country
>>
Perfect, that is the reality.

>>
I haven’t come across any person so far who is paying or receiving rents online.
>>

Agreed, but I have mentioned that by keeping in mind about users of rent payment apps who needs quick money.

👍👍👍👍👍

Thanks for encouragements.

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aam_aadmi wrote:

I haven’t come across any person so far who is paying or receiving rents online, the only way IT deptt can track. Most of rent payments in India are still done in cash, except for commercial/official/company rents.

Any Individual whose total annual income is below the minimum taxable limit (presently Rs. 5 Lakhs) is not liable to file ITR. Annual income of 5 Lakhs means an monthly rent of more than Rs. 41000.

Moreover if you start filing income for small amounts, then IT department will in future force you to file Returns every year whether you have any income subsequently or not.

Further data collection and tracking of IT department is still extremely poor. They have not been able to process the return for last financial year so far. They are unable to verify the TDS entries in Form 26AS with their own servers and keep sending erratic notices. Whatever notices are received for merchant transactions/credit card/mutual fund transactions/property transaction are based on random sampling and not on actual tracking with each PAN number.

All these newspaper articles are meant to create panic/fear amongst the tax evaders, but the reality is that Govt does not have the minimum infrastructure and mechanism to enforce tax compliance in the country

Hello there, here I’m who pays rent online with proper rental agreement/ owner’s PAN. And my landlord too received it online. He also does file taxes every year.

And there are some honest(lazy) tax payers who declares the income out of their rented property along with their income from job.

IT Dept can always mandate the institutions which process rent to report all the transactions. Most likely, they are already doing it and but its just that we are not aware.

I have heard from a reputed tax consultant to file taxes even if it is less than the taxable income, that way you have a proof for your income when IT Dept comes at your door steps after a few years.

And on the entries in 26AS, I had seen it tracking almost correct against one’s PAN. Sure, there could be some erratic notices, that could likely be due to mix up in PAN numbers at bank end.

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andromeda wrote:

Hello there, here I’m who pays rent online with proper rental agreement/ owner’s PAN. And my landlord too received it online. He also does file taxes every year.

And there are some honest(lazy) tax payers who declares the income out of their rented property along with their income from job.

IT Dept can always mandate the institutions which process rent to report all the transactions. Most likely, they are already doing it and but its just that we are not aware.

I have heard from a reputed tax consultant to file taxes even if it is less than the taxable income, that way you have a proof for your income when IT Dept comes at your door steps after a few years.

And on the entries in 26AS, I had seen it tracking almost correct against one’s PAN. Sure, there could be some erratic notices, that could likely be due to mix up in PAN numbers at bank end.

Yup. You are right. As long as both tenant and landlord files taxes, there wont be any issue in future.

We dont see rental income tracked on landlords PAN, hence it is taken easy by Landlords.

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ramadesidime wrote:

Yup. You are right. As long as both tenant and landlord files taxes, there wont be any issue in future.

We dont see rental income tracked on landlords PAN, hence it is taken easy by Landlords.

I was referring to merchant/card/mutual fund transactions tracking. Rental income isn’t there yet and it will likely be very soon

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andromeda wrote:

I was referring to merchant/card/mutual fund transactions tracking. Rental income isn’t there yet and it will likely be very soon

yeahhh… where ever the TDS is deducted, it is shown in 26as.

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