What is the annual information statement and where does its data come from?
It is a compilation, held against your Indian tax identifier, of what third parties have reported about you: banks, registrars, brokers, companies and similar reporting entities. You are not its author. Each line is somebody else's description of a transaction, and both the usefulness and the danger of the compilation follow from that. It shows you what the tax administration has been told, and a return that contradicts it without explanation invites an enquiry. Read it before filing rather than after, and treat each line as a question to be answered, what was this, is the description right, and does my return account for it, rather than a figure to be copied.
My statement shows a transaction I did not make, how do I correct it?
Through the feedback route on the statement itself, which records your response against the reported line, and then through the entity that reported it. The compilation is not the source of the information and cannot be edited as though it were: the correction has to come from the reporting entity's own filing. So do both. Mark the line as incorrect so your position is on record before the return is filed, and ask the bank, registrar or broker to correct what it reported. Keep the acknowledgement of the feedback with the return papers. It is the evidence that the discrepancy was addressed rather than ignored.
Does the statement include income I earned outside India?
It can. Alongside what Indian institutions report, the compilation carries information India receives from other countries under exchange arrangements, which is why an overseas account a client had not mentioned sometimes appears in it. Two consequences follow for anyone with a cross-border file. What you did not report at home may already be known here, which changes the calculation about voluntary correction considerably. And the foreign information is often described in the other country's terms and converted, so the amount shown may not match the figure in your own records even where the underlying facts are identical.
Why is the figure in my statement higher than my actual gain?
Because what gets reported is usually the transaction, not the income. A registrar reports the consideration for a property transfer and a broker reports the proceeds of a sale; neither knows your cost, your improvements or your expenses of sale. So a modest gain can sit behind a large reported number, and the difference is not an error to be corrected but a computation to be evidenced. Keep the purchase documents, the improvement invoices and the transfer costs with the return. The reported figure is where an enquiry starts, and the cost documents are what turn it into the figure you actually filed.
Do I have to report something just because it appears in the statement?
No. The compilation records what was reported about you, not what is taxable, and lines in it are frequently not income at all: a transfer between your own accounts, a maturity of capital, a gift, or somebody else's transaction reported against your identifier. What you cannot do is leave a difference unexplained. The discipline is to reconcile, so that for every line either it is reflected in the return or there is a documented reason it is not. That reconciliation, kept with the return, is the difference between answering an enquiry in one letter and answering it in five.
Why does the same bank interest appear twice in my statement?
Duplicate reporting is common and has ordinary causes: two branches of one bank reporting the same account, an entity reporting a period twice, or one holding reported by both a broker and a registrar. It does not double your income, but a return filed on the compilation's totals will overstate it, and a return filed on the correct figure will appear to understate it. So identify the duplicate, mark it through the feedback route, and keep the bank's own statement showing the single credit. File on the true figure and hold the explanation for the difference, rather than filing on a total you know is wrong.
How does a remittance actually work, and is it taxed?
A remittance is a transfer of money, not a category of income, and moving your own funds between your own accounts is not what creates tax. What can create tax is the income behind the money and the rules of the country it leaves. India, for instance, collects tax at source when a resident individual remits abroad under the Liberalised Remittance Scheme, and requires certification before certain payments leave. The transfer is the trigger for paperwork rather than for tax. See the LRS and tax collected at source.
Do Canada and the United States share tax information?
Yes, through more than one channel. The treaty has an exchange-of-information article that supports both routine and on-request exchange. Separately, an intergovernmental agreement has Canadian financial institutions identify US-reportable accounts and report them to the CRA, which passes them to the IRS, with the reverse flow for Canadian residents. Most other country pairs use the Common Reporting Standard for the same purpose. See FATCA reporting.
