AIR should be filed by entities participating in financial transactions mentioned under Rule 114E of the Income Tax Rules of 1962. The Data Structure File format needs to be downloaded from the Tax Information Network of the Income Tax Department.
The government relies on taxes to run the country and has put in effect a number of provisions designed to simplify the process for common taxpayers. Returns help the Income Tax Department keep a track of things and need to be filed by every eligible individual, with different returns specified for different tasks. One such relatively unknown term is Annual Information Returns, which is explained below.
What is AIR?
Annual Information Returns or AIR as they are commonly known are certain details which a few “specific entities” (individuals/organisations) are expected to file every year. Entities who indulge in certain mentioned financial “transactions” in a financial year should file a return providing information about such deals. Section 285BA of the Income Tax Act forms the basis for Annual Information returns, with Rule 114E of the Income Tax Rules of 1962 contains details about the transactions and entities who are expected to file these returns. In simple terms, individuals who are categorised under the aforementioned sections are required to provide financial information to the government regarding financial deals executed by them in a particular financial year.
Who should File AIR?
Rule 114E of the Income Tax Rules of 1962 states that the following entities (organisations/individuals) should file their Annual Information Returns every financial year.
- Banking companies which adhere to the provisions of the Banking Regulation Act of 1949 or those who find a mention in Section 51 of the aforementioned Act. They should file AIR if they maintain aggregate cash deposits of Rs 10 lakh or more in the savings account of an individual.
- Banking companies who work as per the provisions of the Banking Regulation Act of 1949 or companies which issue credit cards. They should file AIR if the credit card payments of an individual on cards issued by them exceeds Rs 2 lakh per year.
- Trustees or fund managers of mutual funds. AIR should be filed if they receive an amount in excess of Rs 2 lakh for a fund.
- Companies which issue debentures or bonds. AIR should be filed if they receive an amount in excess of Rs 5 lakh from a person to purchase bonds or debentures issued by them.
- Companies which issue public shares. AIR should be filed if they receive an amount equal to or greater than Rs 1 lakh from a person who purchases shares from them.
- An appointed Registrar or Sub Registrar, as mentioned under Section 6 of the Registration Act of 1908. AIR should be filed if an individual purchases immovable property costing Rs 30 lakh or more.
- Authorised officers of the Reserve Bank of India. AIR should be filed if a person purchases bonds issued by the RBI which are worth over Rs 5 lakh.
Procedure to File Annual Information Returns
Individuals/entities who are expected to file AIR can do so by following a few simple steps, as outlined below.
- Log onto the official website of the Tax Information Network of the Income Tax Department and download the format for Data Structure File.
- Once downloaded, one needs to fill the form as per the format using ACII. A software will be required to prepare the report, which can be either any third party software or an in-house one. Individuals can download the AIR RPU software for free to prepare the report.
- Post preparing the file, it needs to be verified. This verification can be done by utilising the File Validation Utility service offered by NSDL.
- The File Validation Utility (FVU) will point out errors, if any in the report. These errors should be rectified and passed through again, until there are no more errors in the report.
- Once error free, the file can be uploaded successfully. A copy of the uploaded file validation should be made on either a CD/pen drive. This copy should be submitted along with a completed Part A Form 61A to a TIN-Facilitation Center. This form can be downloaded from the internet. Individuals can also choose to upload the completed information directly onto the official website of NSDL.
Note: It should be kept in mind that AIRs can be filed only electronically and no offline mode is permitted.
Authority to which AIR is Filed
Annual Information Returns will be received by the National Securities Depository Limited (NSDL), as authorised by the Central Board of Direct Taxes.
Date before which AIR should be Filed
Annual Information Returns need to be filed every financial year, with the due date being the 31st of August which comes after a FY for which it needs to be filed. In simple terms, Annual Information Returns for 2014-2015 need to be filed before 31st August 2015.
Penalties for not Filing AIR
Section 271FA of the Income Tax Act states that a penalty of Rs 100 per day will be imposed on an entity who fails to file AIR after the due date. This penalty will become Rs 500 per day if the return is not filed even after 60 days.