Tax department issues a refund, certain checks and balances must be met. One such measure is the ‘Risk Management System (RMS),’ which the tax department employs to identify ITRs that may warrant further scrutiny. If your ITR has been identified by the tax department’s RMS, then an intimation will be sent to your email address. You can also view this intimation on the e-filing portal (steps to view are given below).
Once the tax department’s RMS has identified your submitted and verified ITR, it will not be processed until you fix the issue. In the worst-case scenario, if you decide not to take any action, then the tax department can issue you an income tax notice.
When can the tax department’s ‘risk management’ system pause your tax refund process?
S Ramakrishnan, former Chief Commissioner of the Income Tax Department says that over the years, the tax department has identified bogus claims in tax returns and with a view to arrest such claims the “Risk Management System has been put in place consequent to which such emails are issued to taxpayers to confirm their claims before issue of refunds.”
“It is seen that a claim of refund has been made in the Income-Tax filed by you. Your Income-Tax Return has been identified under the risk management process of the Income Tax Department. Your confirmation is required on the following claims(s)/deductions(s)/omissions in the return,” said the Income tax department on a intimation sent to a taxpayer as shared by CA Himank Singla on X (formerly Twitter on August 27, 2024.
Tax lawyers say that the RMS process used by the tax department analyses various data sets to identify discrepancies.
“The Income Tax Department uses a risk management process to identify income tax returns (ITRs) that may require further scrutiny. This process involves assessing various factors, such as discrepancies in data, high-value transactions, or unusual claims. When your ITR is selected under this process, it indicates that the department wants to verify certain aspects of your return to ensure the accuracy of the tax refund claim,” says Kunal Savani, Partner, Cyril Amarchand Mangaldas.