Mutual Fund Reporting: People who invest in mutual funds in India need to know that big transactions are not hidden from the Income Tax Department. By law, mutual funds must report such details so that everything stays clear and open. This system is there to make sure the tax department can see all the important money movements and match them with what taxpayers show in their returns.
SEBI to Offer Extra Incentives for First-Time Women Mutual Fund Investors, Says Tuhin Kanta Pandey
Rule 114E
Under Rule 114E of the Income Tax Rules, whenever an investor puts in ₹10 lakh or more in one or more mutual fund schemes, the mutual fund company must report it to the tax office. It is not just mutual funds alone, even stock exchanges, depositories, and registrars share information about capital gains from listed shares and mutual fund units. All of this data goes every year through Form 61A and then appears in the taxpayer’s Annual Information Statement, also called AIS, and in Form 26AS.
CA Sonu Jain, who is Chief Risk and Compliance Officer at 9Point Capital, explained why this is important. He said, “Reporting requirements are designed to cover high-value transactions comprehensively, including both initial investments and capital gains. This allows the department to reconcile declared income with actual financial activity.”
AI Entertainment Startup Dashverse raises USD 13 mn in funding round led by Peak XV Partners
This rule is not only mutual funds that are tracked, but also things like bank deposits, big credit card spends, fixed deposits, and other large transactions. The idea is that nothing should stay outside the records when it comes to money flow.
Manish Goyal, who is Chairman and Managing Director at Finkeda, explained how the department uses this information. According to CNBC TV18, he said, “The Income Tax Department uses this information to verify tax filings. Investors should keep detailed records of their investments to ensure consistency with returns.”
