As the deadline for filing Income Tax Returns (ITRs) for the fiscal year 2020-21 approaches, many individuals have recently received emails from the Income Tax Department regarding significant transactions pointed out in their Annual Information Statement (AIS). Here’s a breakdown of what you need to understand about these communications and how to handle them:
Recipients of these communications
Individuals are being contacted by the Income Tax Department due to irregularities or notable transactions identified in their financial records.
The Income Tax Department reaches out to taxpayers through the AIS/Compliance Portal to gather feedback on information obtained from various sources. Taxpayers may be required to respond or clarify inquiries raised in the e-Campaign section to complete the process.
Highlighted transactions
The e-Campaigns initiated by the Income Tax Department may address various concerns, including non-filing of returns or significant/high-value transactions carried out by the taxpayer during the fiscal year.
Understanding the communication
Explains that the messages displayed in the AIS/Compliance Portal’s e-Campaign section indicate that the tax department has uncovered information inconsistent with the income reported in the taxpayer’s ITR.
Deadline for updated returns
Eligible taxpayers are able to file an updated Income Tax Return to rectify errors or omissions in their previously submitted returns. This may lead to additional tax liability upon recalculating income. The deadline to file an updated return for the fiscal year 2020-21 (Assessment Year 2021-22) is March 31, 2024.
Responding to the communication
Since the deadline to file ITR-U is near, the tax department is sending emails pertaining to FY 2020-21 to some taxpayers stating that their case has been selected for e-Verification under e-Verification scheme 2021 visible under the tab ‘e-Campaign’ after clicking ‘Notices’ tab of the Compliance Portal.
He further explained that emails are sent to taxpayers who have either not filed their ITR or whose disclosed information in the filed ITR does not match with the information available with the Department.
Accessing the communication
On the ITR e-filing portal, navigate to the pending action tab and select “Compliance Portal”. Then, proceed to the e-Campaign tab to access a list of transactions flagged by the tax department.
By clicking on each flagged transaction, taxpayers can view additional details about the specific transaction. Transactions marked with an “e” are those that may not need to be disclosed in the ITR according to the income tax system, typically received after recent years’ ITR processing.
Tax experts recommend that these communications are sent to improve compliance and validate financial transactions. a specialized tax filing assistance platform, explains that the purpose of these communications is to verify financial transactions based on information obtained by the tax department.
The department examines data from various sources, including TCS returns, TDS returns, specified financial transactions (SFT) returns, and other relevant channels. Additionally, the department systematically collects and assesses data concerning goods and services tax (GST), import/export activities, as well as transactions involving securities, derivatives, commodities, and mutual funds.
This is achieved by leveraging information provided by diverse third-party entities.