Boosting Tax Transparency: IT Dept’s Compliance Move

Introduction

In a bid to bolster tax transparency and ensure compliance among taxpayers, the Income Tax Department has taken proactive steps to address discrepancies in financial transaction information. Through the Annual Information Statement (AIS) module, the department provides taxpayers with access to data on specified financial transactions from various sources, aiming to promote voluntary tax compliance and transparency.

Identification of Discrepancies

Recent assessments of Income Tax Returns (ITRs) filed for Assessment Year (A.Y.) 2021-22 (Financial Year (F.Y.) 2020-21) have revealed inconsistencies between the information declared in the ITRs and the data on specified financial transactions available with the department. Moreover, cases where taxpayers have not filed ITRs for A.Y. 2021-22, coupled with the department’s possession of information on high-value financial transactions, necessitate further scrutiny to ensure compliance.

Communication with Taxpayers

To rectify these discrepancies and encourage accurate reporting, the Income Tax Department has rolled out the e-Verification Scheme-2021. Under this scheme, the department is reaching out to taxpayers via their registered email accounts to highlight the mismatches in information for A.Y. 2021-22 (F.Y. 2020-21). Taxpayers are urged to review their AIS through the e-filing portal and, if required, file updated ITRs (ITR-U). Additionally, eligible non-filers can submit updated returns (ITR-U) under section 139(8A) of the Income-tax Act, 1961.

Deadline for Compliance

Taxpayers are reminded that the deadline for filing updated returns (ITR-U) for A.Y. 2021-22 (F.Y. 2020-21) is March 31, 2024. This deadline underscores the importance of timely compliance and accurate reporting of financial transactions to ensure transparency and facilitate efficient tax administration.

Conclusion

The communication initiative by the Income Tax Department underscores its commitment to enhancing tax transparency and fostering voluntary compliance among taxpayers. By proactively engaging taxpayers and encouraging them to review and update their ITRs, the department aims to ensure accurate reporting and uphold the integrity of the tax system.