Income tax can send notice on these transactions, do this work before it arrives

The new strategy of the Income Tax Department in the country may increase the problems of those doing big transactions. It will be impossible to escape this strict surveillance of the government. Know under which new rules your financial activities are being directly monitored.

High Value Transaction IT Rules: The Income Tax Department in India is now using various data analysis techniques to identify those individuals who have not filed Income Tax Returns (ITR) or have under-reported their income. The government will identify such people and take strict action against them. To make this process effective, the IT Department is taking help from various government agencies to identify those people who are spending heavily but are not filing ITR or hiding their actual income.

How does the government keep an eye on your high value transactions?

New rules for mandatory ITR filing

Earlier, only those people were required to file ITR whose income was more than Rs 2,50,000. But, from April 1, 2019, the government has made it mandatory for those who make certain high value transactions to file ITR, even if their income is less than Rs 2,50,000. These transactions include many types of transactions.

For example, if a person has deposited more than Rs 1 crore in one or more current accounts, then it comes under high value transaction. Apart from this, if a person has spent more than Rs 2 lakh on foreign travel or if a person’s annual electricity bill is more than Rs 1 lakh, then these transactions are high value and you may come under the surveillance of the Income Tax Department.

TDS rules on cash withdrawal

• To keep a check on cash transactions for high value transactions, the government has directed banks to deduct TDS in the following cases:
• If a person withdraws more than Rs 1 crore in cash in a financial year, 2% TDS will be deducted.
• If a person has not filed ITR for the last three years, 2% TDS will be applicable on cash withdrawal of more than Rs 20 lakh and 5% TDS will be applicable on withdrawal of more than Rs 1 crore.

Upgraded Form 26AS

The Income Tax Department has upgraded Form 26AS to include ‘Specified Financial Transactions’ (SFT). Apart from this, ‘Annual Information Statement’ (AIS) has also been introduced where taxpayers can view all their financial transactions. Under this, major institutions like registry offices, banks, post offices and stock exchanges report transactions above certain prescribed limits directly to the Income Tax Department. The aim of this initiative is to prevent tax evasion and motivate taxpayers to honestly comply with their tax obligations.

What to do if SFT appears in Form 26AS

It is important for taxpayers to check the SFT transactions reported in their Form 26AS. After this, taxpayers should ensure that while filing their income tax return (ITR), they have mentioned the high value transactions included in the form. And make sure that the tax applicable on these has been calculated accurately.

If there is any error or mismatch in the reporting of these transactions, it could lead to an Income Tax notice heading to your home.

E-campaign of Income Tax Department

The Income Tax Department has launched an e-campaign for the convenience of taxpayers. The objective of this campaign is to inform those taxpayers who:

Are not filing income tax returns

Whose returns have some discrepancies or deficiencies found
If you receive an email or SMS under this campaign, what should you respond to in the following situations:

If you have not filed ITR: If your ITR has been filed correctly, but you still receive a notice, it is important that you provide feedback to the government.

If there is a discrepancy or error in your ITR: The discrepancies may not necessarily be intentional. There may also be a mistake in entering data in AIS. In such a case, the taxpayer should visit the AIS portal and use the ‘Provide Feedback’ option.

How to respond to e-campaign notice online?

If you have received an email or SMS regarding high-value transactions or non-filing of ITR, you can respond to the Income Tax Department by following the steps given below:

Step 1: Login to your Income Tax e-filing account.

Step 2: Go to the home page and select ‘Pending Actions’ > Compliance Portal > ‘e-Campaign (AY 2021-22 Onwards)’ option.

Step 3: Select the relevant e-campaign.

• This will redirect you from the e-filing portal.
• Here you will find the option to ‘Give Feedback on AIS’.
• If there is no e-campaign against you, then this message will appear – “No Compliance Record has been generated for you”.

Step 4: Select the category of information for which you have received the notice.

Step 5: Select the relevant transaction.

Transactions for which feedback is expected will be marked as ‘Expected’.

Step 6: Submit your feedback. Choose one of the following options:

• The information is correct
• The information is not completely correct
• The income is not taxable
• The information relates to another PAN/year
• The information is duplicate or already included in other details
• The information is inconsistent

This initiative of the Income Tax Department is aimed at preventing tax evasion and motivating taxpayers to honestly fulfill their tax obligations. If you pay tax, then follow your tax liability on time keeping in mind the AIS and ITR rules, so that any kind of inconvenience can be avoided.