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E-verification of the Information in the Income Tax Portal- A step

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E-verification of the Information in the Income Tax Portal- A step towards transparent working

 

The Income Tax Department is getting the information from multiple sources and various agencies which is consistently flowing in an electronic mode & organized manner. The information which is commonly available in the database of the income tax department consists of the following:

  1. Aggregate cash deposit for Rs 10 lakh or more in saving bank account. 2.
  2. Purchases of bank drafts, pay orders, purchase orders or bankers cheque in cash for Rs 10 lakh or more in a year.
  3. Cash payment made for Fixed Deposits amounting Rs 10 lakh or more in a year.
  1. Purchase of any pre-paid instruments issued by RBI of Rs 10 lakh or more in a year.
  2. Cash deposit or withdrawal amounting Rs. 50 Lakh or more in one or more current accounts of a person in a year.
  3. Cash received for an amount exceeding Rs. 2 Lakh for the sale of goods or rendering of services.
  4. Expenditure in foreign currency via debit card, credit card or traveler’s cheque for the amount Rs.10 Lakh or above in a year.
  5. Payment by credit card amounting Rs.10 Lakh or above in a year
  6. Credit card bill paid in cash for Rs 1 lakh or more.
  7. Purchase or sale of immovable property of Rs. 30 Lakh or above.
  8. Mutual Fund Investment in a year of Rs 10 lakh or more.
  9. Purchase of bonds or debentures for Rs 10 lakh or more in a year.
  10. Purchase of shares of company through the public offer or right issue for Rs 10 lakh or more.
  11. Share buy-back from a person amounting Rs. 10 lakhs or more.
  1. Capital gains on transfer of listed securities or units of Mutual Funds
  2. Dividend Income
  3. Interest Income

In addition to this, the information of turnover as per GST Database, TDS/TCS Details, is also forming the part of income tax department database.

Accuracy & Error in the Information:

There are many cases wherein erroneous information is getting transmitted resulting in unintended notices & consequences on the taxpayers. Following could some of the common instances:

  1. The property was sold with the name of various joint holder / consenter but taxpayers have offered the amount for taxation in the name of just one person who may be the beneficial owner. Notices were issued to all the joint owners and scrutiny assessment was taken up for all such persons.
  2. Investment in Bank FDR or Share market has been done in joint name but the income has been offered in the name of any one person The information was getting reflected in the name of all the joint holders and addition has been done while processing the return U/s 143(1)(a) in the hands of all.
  3. The data is wrongly punched by the reporting entities resulting in miscarriage of the actual information. For example the property was sold for Rs. 52 Lakh but the data is wrongly punched as 520 Lakh.
  4. Cash was deposited in the account of the credit societies or firm but the reporting banks, while filing the details with the income tax department, have punched the PAN of the signing authorities. As a result, the cash deposit figure was getting reflected in the name of the signing authorities and not in the name of the concerned credit societies or firm.

The result of all the above errors was obvious. The taxpayer cases were getting selected unnecessarily for scrutiny assessment or other proceedings. To avoid it, a simplified mechanism is devised by way of “E-verification Scheme-2021”. Income tax department is working mostly on the principle of transparency whereby the information available is shared with the respective taxpayers with an option to give feedback over it. By timely e-verification of the information as to whether it is correct or not, whether it pertains to the taxpayers or not, whether the taxpayer has any objection to the further processing of the information, future notices & proceeding can be avoided.

How to carry out the e-verification of the information:

The entire process of e-verification is in electronic mode without any personal interaction. The same is summarized in the flow chart attached hereunder:

Flow chart for Taxpayer : e-Verification Scheme, 2021

 

Login e-filling portal

 

Click on Services

 

Select Annual Information Statement

 

Click F.Y.

 

Click on Annual Information Statement

 

View Information

 

Reported transactions may be in three categories

 

Pertains to taxpayerDoes not pertains to taxpayer                                             

Tax payer may have objection

 

If notice u/s 133(6) issued                     May give feedback by             Income Tax Deppt. Will

Reply to this notice may be                   pressing feedback button        contact the source/ RE

Made through electronic                      under AIS

mode as far as technologically

feasible

                                                                               if sources agree then it

Information is                                                                            file correction statement

Is correct and not reflected

In ITR                                                                                     if sources disagree, Depttt. may further

                                                                                    call for explanation from assessee

Update return u/s 139(8A)

                                                     Information has discrepancy

                                                             Feedback to be given

Conclusion:

A stitch in time saves nine. By responding to the information over the electronic portal, one can avoid future unintended consequences. The taxpayers must use this facility at the initial stage so as to further notices & action by the department. The general statistics shows that there are more than 60% of the information which has remained unverified so far and may result in further proceedings. Government is attempting to make the tax system seamless, painless, face-less. It’s time for the taxpayers to remain proactive and respond in a time bound manner.

Flow Chart





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