Annual Information Return (AIR)

An Annual Information Return is a format for filing an additional return with the Income Tax Department, apart from the regular return mentioned under Section 139. The Annual Information Return (AIR) discloses high-value financial transactions carried out by assessees during the financial year. The AIR is required to be furnished under section 285BA of the Income-tax Act, 1961 by the specified persons in respect of the specialized transactions mentioned in the Act. A transaction registered or recorded by an assessee during the financial year will attract the need to file an AIR in case it falls under the specified criteria mentioned in the Act.

The due date of filing of the return is the 31st of August of each year. The 'specified persons' and the 'specified transactions' are listed in Rule 114E of the Income-tax Rules, 1962.

Who should file Annual Information Return (AIR)?

Under section 285BA of the Income Tax Act, 1961, the specified persons are required to record and report high-value financial transactions of individuals. The specified persons include individuals and taxpayers undertaking the specified financial transactions, banks, mutual funds, institutions issuing bonds, and registrars, or sub-registrars.

Transactions to be Reported in AIR

The list of high-value transactions, for which AIR’s have to be filed, which is specified in rule 114E of the Income Tax Rules, 1962. High-Value transactions are those that are above the prescribed limit. The prescribed limit has been determined differently for assessees falling under different circumstances. For example, a bank has to file an AIR when the aggregate cash deposits of a particular client who holds a saving bank account exceeds ten lakh rupees in a financial year. A Registrar or Sub-Registrar should file AIRs for every individual who is involved in any transactions relating to immovable property, including land, house, or building wherein the value of the asset exceeds thirty lakh rupees. The liability will also arise in case of execution of a deal that involves joint parties, and the values of the share of one or more parties are in excess of thirty lakh rupees. In such cases, the AIRs must be filed for all the individuals who are the joint parties. The Central Board of Direct Taxes (CBDT) has expanded the scope of AIR since the volume of high-value transactions in the country has risen massively. A Bank has to report every person who makes one or more deposits in a year, which total exceeds ten lakh rupees. The amount shall be calculated after the exclusion of renewal or reinvestment of the deposits. However, it has been made mandatory now to file an AIR even in the case of those who pay credit bills by means of cash, instead of making the payment by cheques or bank transfers, and it has been specifically mentioned that credit card payments which exceed one lakh rupees in a year shall be reported. Likewise, earlier, a mutual fund company had to file AIRs for those unitholders who had invested more than two lakh rupees in a scheme, whereas now the limit has been raised to ten lakh rupees. AIRs helps the government to collect information about higher value transactions made by any taxpayers. The collected information is cross-checked against the income tax filing and tax paid by the income tax assessee in the tax return. The aim is to check tax evasion and to curb black money circulation in the economy. Know about the types of Assessments that are applicable to taxpayers in India.

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Frequently Asked Questions

Common questions about Annual Information Return in India.

An Annual Information Return (AIR) is an additional return that must be filed with the Income Tax Department, apart from the regular income tax return. It discloses high-value financial transactions carried out by assessees during the financial year, as specified under section 285BA of the Income-tax Act, 1961.

The specified persons required to file an AIR include individuals and taxpayers undertaking the specified high-value financial transactions, banks, mutual funds, institutions issuing bonds, and registrars or sub-registrars.

The list of high-value transactions that need to be reported in an AIR is specified in Rule 114E of the Income Tax Rules, 1962. These include cash deposits in savings accounts exceeding Rs. 10 lakh in a year, investments in mutual funds exceeding Rs. 10 lakh, immovable property transactions valued above Rs. 30 lakh, and credit card payments exceeding Rs. 1 lakh, among others.

The primary purpose of filing an AIR is to help the government collect information about high-value transactions made by taxpayers. This information is cross-checked against the income tax filing and tax paid by the assessee to check for tax evasion and curb the circulation of black money in the economy.

The due date for filing an AIR is the 31st of August of each year.

A bank has to file an AIR when the aggregate cash deposits of a particular client who holds a savings bank account exceeds Rs. 10 lakh in a financial year.

A Registrar or Sub-Registrar should file AIRs for every individual involved in any transactions relating to immovable property, including land, house, or building, wherein the value of the asset exceeds Rs. 30 lakh.

Yes, if a transaction involves joint parties and the value of the share of one or more parties exceeds Rs. 30 lakh, AIRs must be filed for all the individuals who are the joint parties.

Credit card payments which exceed Rs. 1 lakh in a year shall be reported in an AIR.

Yes, the Central Board of Direct Taxes (CBDT) has expanded the scope of AIR reporting since the volume of high-value transactions in the country has risen massively. For example, it is now mandatory to file an AIR even in the case of those who pay credit bills by cash instead of cheques or bank transfers.