Annual Information Statement
Ushering in a new era of tax administration May 2024
Background
This presentation discuss some key aspects of tax policy paper "Annual Information Statement — Ushering in a New Era of Tax Administration” (Link to the report), prepared by Deloitte India's tax policy group. The policy paper aims to offer a comprehensive overview of how AIS can be made more efficient and effective, ultimately benefiting both taxpayers and tax administrators
The policy paper provides a comprehensive analysis of the evolution of AIS and its role in increasing tax base in India. There are some specific recommendations to enhance the efficiency and effectiveness of AIS, thereby improving the experience and outcome for both taxpayers and tax administrators
Towards the end, the paper talks about some global best practices and ways in which India can integrate them into its AIS framework as well as ways to tackle black money through AIS. Through the release of this paper, we aim to initiate constructive discussions and welcome insights from diverse stakeholders. We believe that the policy paper and the conversations will serve as a valuable resource for policymakers, researchers, and practitioners alike
With this context, please refer the ensuing slides exploring the potential benefits of AIS in improving tax administration and taxpayer services
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Annual Information Statement (AIS):
Introduction and overview
Success of existing AIS system coupled with other digitisation initiatives of the Indian Government
Recommendations for improvement of AIS functionality:
A) Areas of improvement
B) Introduction of additional data points in AIS
Existing sources of information and global best practices to enhance AIS functionality
Contents
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Introduction of pre-filled tax returns based on the information in Form 26AS
Expansion on coverage of information captured in pre-filled tax returns basis AIS
overview 2020 2021
AIS: Introduction and
2019 4
Mechanics Feedback Mechanism
Introduction of AIS
Extension of Form 26AS Objectives of AIS
Success of existing AIS system coupled with other digitisation initiatives of the Indian Government (1/2)
Jump in reported information with addition of information of about 3 crore people 2x
Increase in number of deductees from 4.8 crores in AY 2016-17 to 9.2 crores in AY 2022-23 2x
Increase in reported transactions from 70 crore in AY 2016-17 to 144 crore in AY 2022-23 due to increase in TDS codes 6.11%
India’s direct-tax GDP ratio for year 2022-23 due to surge in tax revenues
The tax department's e-campaigns have significantly improved voluntary compliance, with a substantial reduction in non-filers and a notable increase in the filing of updated tax returns. Till January 2024, the tax department has garnered about INR 4,600 crore in taxes from 56 lakh updated returns filed in the past two years 16.1%
More ITRs filed for AY 2023-24 till July 2023 as compared to AY 2022-23
12x
5
Success of existing AIS system coupled with other digitisation initiatives of the
(2/2)
1
Pre-filled tax returns
Seamless filing and reduced instances of non-compliance in tax returns
3
Mechanism to provide feedback and thus reduce unnecessary litigation
Nudges towards voluntary compliance
5
Faster processing of taxpayers’ tax return and quicker refunds
2
4
Information driven tax audits
2
Better detection of non-filers of tax return
Lower administrative costs as manual intervention is limited
4
Better detection of tax evasion cases
1
Highlight accurate and prompt collection of taxes
3
5
6 Benefits
Indian Government
Tax
Taxpayers
department
Recommendations for improvement of AIS functionality (1/2)
03 01
03 04 05 06
Make available complete information before filing of tax return
Inclusion of purchase and sale date of shares and securities
Only verified information to be used
Areas of improvement
02
Bifurcate tax refund in principal and interest and inclusion of interest omitted
Incorporate tax payments in AY to which it pertains
Inclusion of actual rent paid instead of exemption claimed
7
Recommendations for improvement of AIS functionality (2/2)
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Auto-populate data available with MCA and items of tax audit report
07
Integrate tax saving investments such as section 80C, 80D, 80G etc.
Incorporate details on outstanding demands, pending refunds and unclaimed TDS Introduce additional data points
Incorporation of intra-day transactions
08
Include details on directorships and ownership of unlisted shares
Incorporate sale and purchase data of unlisted shares
09 10
03
8
Reserve Bank of India
Existing sources of information Connected data systems
Ministry of Corporate Affairs
Securities and Exchange Board of India
Central Board of Indirect taxes and Customs
Registrars / Subregistrars
Specified Financial Transactions
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Existing sources of information and global best practices to enhance AIS functionality
Standard Business Reporting Standard Audit File for Tax One taxpayer One govt view Crypto-Asset reporting framework Common Reporting Standard Leverage from global best practices DPI MCAA Improved AIS functionality Valuers
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