Annual Information Return (AIR): Due Date, Format, Limits & How to File

The Annual Information Return (AIR) under section 285BA is a statement furnished by entities like banks, mutual funds, registrars, etc., to provide the income tax department with information on high-value transactions. The Annual Information Return has been renamed as the Statement of Financial Transaction (SFT) or Reportable Account. The purpose of the Annual Information Return is to curb black money transactions in the country. 

What is Annual Information Return?

The Income Tax Department is wary of high-value transactions undertaken by taxpayers. Therefore, the IT department has prescribed specific entities (banks, credit card companies, units of mutual funds, etc.) to report the financial information of specific high-value transactions during the financial year to the Income Tax Department as Annual Information Return (AIR). The specified entities (banks, credit card companies, units of mutual funds, etc.) must furnish Annual Information Return (AIR) under section 285BA of the Income Tax Act, 1961.

Criterion and Limits of Annual Information Return

The Criterion of the Annual Information Return is based on the three factors:

• Specified entity under section 285BA of the Income Tax Act, 1961 
• Specified Financial Transactions
• Threshold limit of the Specified Financial Transactions

Who is Required to File an Annual Information Return?

The list of specified entities that are obligated to furnish the Annual Information Return of the taxpayer under section 285BA of the Income Tax Act, 1961, is as follows:

• Banks
• Credit card companies
• Mutual Funds
• Companies selling bonds and debentures
• Companies selling shares through a public or right issue
• The Reserve Bank of India issuing bonds
• Registrar or Sub Registrar under Section 6 of the Registration Act, 1908

List of Transactions to be Reported under AIR

Under section 285BA of the Income Tax Act, 1961, the specified entities must provide an Annual Information Return to the Income Tax department if the specific financial transactions exceed a certain limit discussed below:

Aggregation Rule 

In determining the threshold limit, the specified entity ( bank, mutual fund company, etc.) should follow the aggregation rule discussed below:

• All accounts of the same nature (for example, all savings accounts of a person in a bank) must be aggregated.
• All transactions of the same nature (for example, all cash deposits made by a person) in a financial year must be aggregated.
• In a joint account, the entire transaction value is added to each account holder.
• The limit of deposits and withdrawals has to be considered separately.

Annual Information Return Format and Data Requirements

According to Rule 114E of the Income Tax Act Rules, 1952, the specified persons (mentioned above) must furnish an Annual Information Return under section 285BA in the Form 61A (Part B) in digital format. Along with Form B, filers must also submit a signed document in paper format. This document is called as Part A of Form 61A.

The filers of AIR should furnish it to the Director of Income Tax (Intelligence and Criminal Investigation), DIT (I & CI)

The filer can file only one AIR in a financial year. If he wants to rectify any genuine mistakes or furnish additional transactions to be included in AIR, he can do so by way of ‘Supplementary Information’. 

Three situations when a filer is required to furnish supplementary information:

• If the Directorate of the Income Tax (Intelligence and Criminal Investigation) sends a notice to the filers (banks, mutual funds, registrar, etc) asking for further information related to the filed AIR, they must furnish it within the specified deadline.
• If the filer wants to add any information related to the filed AIR without notice from the Income Tax department.
• If a filer files AIR through the Tax Information Network- Facilitation Centre (TIN-FC) and receives a provisional receipt from them, the missing information or the errors pointed out by the TIN-FC should be submitted with corrections within 30 days.

Form 61A has four parts:

Part A consists of Statement Level Information, which is common for all types of transactions.

Part B consists of the reporting of aggregated financial transactions in which the taxpayer is involved.

Part C consists of the information specific to the taxpayer's account.

Part D consists of information related to immovable property transactions.

Due Date for Filing Annual Information Return

The due date of filing the Annual Information Return (AIR) or Form 61A by the specified entities (mentioned above) is 31st May of the following financial year for which the AIR is filed.

How to File an Annual Information Return?

The specified entities (banks, mutual fund companies, registrar, etc) can file the Annual Information Return following the below-mentioned steps:

Download the File Format

Log in to the official website of the Tax Information Network of the Income Tax Department and download the data structure file format.

Filling the Form

The filers can prepare the report using third-party software, in-house built software or download the Annual Information Return Preparation Utility (AIR RPU) software for free.

Check for errors

After preparing the report, the specified entities (banks, mutual fund companies, etc.) should verify it for mistakes by availing themselves of the File Validation Utility Service offered by the National Securities Depository Limited (NSDL).

Rectification of error

If the file contains errors, the File Validation Utility service will point them out. The reporting entity should rectify those errors.

Upload the file

Once the errors are rectified, the filers can successfully upload the file to the NSDL website of the Income Tax department.

Submit the file

The reporting entity should make a copy of the validated file on a CD or a pen drive and download and complete Part A of Form 61A from the Internet. Part A of Form 61A should be submitted in paper format along with a CD or a pen drive to the TIN-facilitation Centre. 

Penalty for Failure to File or Incorrect AIR

Under section 271FA, a penalty of Rs. 500 per day for the days (after the due date) in which the Annual Information Return is not filed is imposed on the reporting entity that is required to file the AIR. If the reporting entity fails to file AIR beyond the extended deadline, a penalty of Rs. 1000 per day is imposed.