Last Chance to Escape Income Tax Notice (Fin. Year 2018-19)
The Income-tax Department has launched an e-Campaign to boost voluntary compliance from taxpayers till July 31, 2020. This campaign is only for the financial year 2018-19. Normally, the Income-tax return for the financial year 2018-19 was due on 31/08/2019 and a revised or belated return for the same was due on 31/03/2020. However, because of the Covid-19 lockdown in the country, this date was extended to 30/06/2020 and again extended to 31/07/2020.
In the meanwhile, the Income-tax Department mined and reviewed the data on transactions of taxpayers which is available with them and sought to help the taxpayers to review their such transactions and if need be the taxpayers are expected to file their I-T Returns or revise their I-T Returns as the case may be.
Normally, this could have invited notice from the Income-tax Department and scrutiny of such transactions. They think that these transactions are done by you but have not shown the same into your I-T Return. And this thought would have materialized into a scrutiny notice. But the Department is talking voluntary compliance here! We must grab this opportunity to clean our records. Even if you don’t think you have missed anything in your I-T Return for FY 2018-19, there’s nothing wrong with checking it once.
What are the transactions that the I-T Department is looking into?
Broadly these high-value transactions are:
- Sale and purchase of immovable property of more than Rs. 30 lacs
- Cash deposits of more than Rs. 10 lacs into a savings bank account
- Reported TDS by someone but corresponding income not reported by you
- Credit card bills of more than Rs.2 lacs
- Purchase of mutual funds of more than Rs. 2 lacs
- Sale and purchase of shares of more than Rs. 2 lacs
- Purchase and sale of jewelry of more than Rs. 50,000/-
- Investment in Fixed Deposits of more than Rs.10 lacs
In case, in F Y 2018-19, you have entered into any of these transactions then there’s nothing wrong in looking back once to verify whether it’s reported properly by you in your I-T Return.
How are my transactions known to the I-T Department?
There are three parties to every recorded transaction, these are seller, purchaser, and recorder of such transactions. For example, in the sale of immovable property, you sell it (first-party), someone else (second party) buys it and the Sub-registrar of the Government records such sale and buys transaction. In the credit card transactions, such a recorder is the Bank issuing the credit card. This recorder provides information to the I-T Department about your transactions. No, he doesn’t give it on his own but is required to give this information by law through something called Statement of Financial Transactions (SFT). These recording agencies like banks, co-operative societies, registrars, SEBI, etc. are required to filed SFTs to the Income Tax Department on a periodic basis and the Department then reviews this data and matches the disclosures made in the I-T Returns. In the case wherever there is a discrepancy between these two, the Department may issue a notice to such taxpayers.
What should I do?
If you did not get any SMS or e-mail from the Income Tax Department, then relax and keep checking e-mails. If you are in receipt of e-mail or SMS, it means that Department thinks that there is something wrong with your I-T Return if you have filed one already. If you have not filed I-T Return, it is asking you to file I-T Return.
In case of receipt of the e-mail, you must click on the link (if provided) and open www.incometaxindiaefiling.gov.in. Then log in and open the relevant window and you will be able to access the details of such transactions. Then you have to see whether the Department is correct in its claim. Sometimes it so happens that the transaction is not pertaining to you, but your name crops up somehow. For instance, your spouse has sold the house and declared capital gains in her I-T return, and you were simply the confirming party to such a transaction. Still, your name may pop up as the transacting party and you may get notice and in the present case an e-mail. The Department has thought through this and has given the following options to choose and click:
|Sr. No.||Option on the Income-tax Department portal||TaxBuddy recommendation if you choose this option|
|01||Information is correct||File I-T Return if not filed OR revise already filed I-T Return|
|02||Information is not fully correct||File I-T Return if not filed OR revise already filed I-T Return for the part of correct information|
|03||Information related to other people/year||Nothing to be done|
|04||Information is duplicate/included in other displayed information||Nothing to be done|
|05||Information is denied||Nothing to be done|