Income Tax Compliance and the Latest e-Campaign Initiatives

Income Tax Compliance and the Latest e-Campaign Initiatives

The income tax department employs diverse data analysis techniques to identify individuals who either fail to file income tax returns or underreport their income. In collaboration with various government agencies, the department obtains information about individuals engaged in significant spending but not fulfilling their tax obligations.

High-value transactions refer to financial dealings involving substantial amounts of money, reported to the Income Tax Department by banks and other institutions when surpassing a specified threshold. The Income Tax department closely monitors these transactions through the statement of financial transaction (SFT) in Form 61A or reportable accounts in Form 61B, submitted by specific entities. These entities are obligated to disclose information about particular high-value transactions they have registered, recorded, or maintained during the fiscal year, enabling the Income Tax Department to track individuals' financial activities and ensure tax compliance.

The table outlines transactions that may trigger notices from the Income Tax Department and their corresponding reporting authorities.

Sr No	Transaction	Rs	Reporting
1	Cash payment for purchasing bank draft, pay order, banker's cheque, or prepaid RBI instruments	10,00,000.00	Banks or co-operative society (File Form 61A)
2	Cash deposits in a savings bank account	10,00,000.00	Banks, Co-operative society, Postmaster general
3	Cash deposit or withdrawal from a current account	50,00,000.00	Banks or co-operative society
4	Sale or purchase of an immovable property	30,00,000.00	Property Registrar/Sub-registrar (File Form 61A)
5	Investments in shares, mutual funds, debentures, and bonds in cash	10,00,000.00	Company issuing Shares, Debentures, Bonds, Mutual Fund Trustee
6	Payment of credit card bill in cash	1,00,000.00	Banks or co-operative society
7	Payment of credit card bill other than through cash	10,00,000.00	Banks or co-operative society
8	Sale of foreign currency, Crediting FOREX card, Spending in foreign currency through a debit or credit card or through traveler's cheque or any other instrument	10,00,000.00	Authorized Person under Foreign Exchange Management Act, 1999
9	Cash deposits in fixed deposit or recurring deposit account	10,00,000.00	Bank, Co-operative society, Nidhi Company, NBFC

Measures Taken By The IT Department To Trace High-Value Transactions:

1.Upgraded Form 26AS:- 

Form 26AS has been enhanced to incorporate Specified Financial Transactions (SFT), including an 'Annual Information Statement (AIS)' displaying all financial information. Specified institutions must report transactions exceeding the threshold to the income tax department, and these are reflected in the AIS portal for voluntary taxpayer disclosure.

2.Applicability of TDS on Cash Withdrawal:- 

The government proposes TDS at 2% on cash withdrawals exceeding Rs 1 crore during the financial year. For non-ITR filers in the last three financial years, TDS is at 2% for withdrawals exceeding Rs 20 lakh and 5% for withdrawals exceeding Rs 1 crore.

3.Mandatory Filing of Returns:-

 ITR filing is now mandatory for individuals with certain specified high-value transactions, even with income below Rs 2,50,000. Examples include deposits in current accounts exceeding Rs 1 crore, foreign travel expenditure over Rs 2 lakh, or electricity bill expenditure exceeding Rs.1 lakh.

Action To Be Taken If Form 26AS Reflects SFT Transactions

1. Verify SFT transactions in Form 26AS for accuracy.

2. Report high-value transactions in ITR filing.

3. Ensure accurate calculation of tax liability.

Launch Of e-Campaign

The income tax department initiates an e-campaign for voluntary compliance, targeting:

- Non-filers of income tax returns

- Assessees with discrepancies/deficiencies in their returns

Recipients of Email/SMS Of e-Campaign From Income Tax Department

The department sends emails/SMS to identified taxpayers to verify financial transactions obtained from various sources. This includes information related to GST, imports/exports, and transactions in securities, derivatives, commodities, and mutual funds. You may receive an email/SMS if:

•  You haven't filed an Income Tax Return.

•  There are discrepancies/deficiencies in your Income Tax Returns. Report errors to the IT department through 'Providing feedback on AIS.