The income tax department employs different data analyses to identify individuals who have either failed to file income tax returns or have provided incorrect income details. As part of this initiative, the IT department has collaborated with government agencies to gather information on individuals displaying high-value transactions but either not filing their ITR returns or underreporting their incomes. For such instances, the IT department is issuing notices to the individuals who fall in the said category.
So, if you have received an email or SMS regarding your high-volume transaction, this article will detail how to report your response to a high-value transaction through the e-campaign portal. But first, let’s understand what high-value transactions are.
What Are High-Value Transactions?
High-value transactions are financial transactions that exceed a certain threshold amount set by the IT department and are reported by banks and other institutions. These transactions raise potential alerts for the department, triggering scrutiny and leading to inquiries or tax assessments.
The Income Tax department employs the statement of financial transaction (SFT) in Form 61A or a reportable account in Form 61B to rigorously monitor substantial financial transactions. Designated entities must supply information about high-value transactions recorded, registered, or upheld during the fiscal year. This practice facilitates the Income Tax department to track individuals’ financial activities and promote tax conformity.
Here’s is a list of transactions for which you may receive a high-value transaction notice from the IT department:
S. No. | Transactions | Threshold (INR) | Reporting Authority |
1 | Cash payment is accepted for acquiring a bank draft, banker’s cheque, pay order, or prepaid instruments issued by the Reserve Bank of India. | 10,00,000 | Cooperative societies or banks are required to disclose the transaction to the Director of Income Tax by submitting Form 61A. |
2 | Amount of cash deposited in a savings account | 10,00,000 | Post-master general, co-operative societies or Banks |
3 | Amount of cash withdrawn or deposited from a current account | 50,00,000 | Co-operative societies or banks |
4 | Buying or selling of immovable property/asset | 30,00,000 | The sub-registrar or property registrar must report such transactions via form 61A. |
5 | Investment in mutual funds, bonds, shares and debentures in cash
(Transferring amount from one scheme to another does not require reporting) | 10,00,000 | Mutual fund trustees and companies which issue shares, bonds and debentures. |
6 | Paying credit card bills with cash | 1,00,000 | Banks issuing credit cards |
7 | Paying credit card bills other than cash | 10,00,000 | Banks issuing credit cards |
8 | Crediting any FOREX card, selling foreign exchange, spending in foreign currency using a credit or debit card or any other method. | 10,00,000 | Any authorised person registered under the Foreign Exchange Management Act, 1999 |
9 | Cash deposits in Fixed deposits or recurring schemes | 10,00,000 | NBFCs, Nidhi, co-operative societies, post offices, or banks. |
How Does The Income Tax Department Trace High-Value Transactions?
Here’s how the IT department keeps track of high-value transactions made by any individuals during a financial year:
Enhanced Form 26AS Update
The tax authorities have recently enhanced Form 26AS to incorporate details related to Specified Financial Transactions (SFT). Additionally, they have introduced the ‘Annual Information Statement (AIS),’ providing a comprehensive overview of all financial information.
Entities such as registrars, banks, post offices, stock exchanges, etc., must report transactions surpassing specified thresholds to the income tax department. These reported transactions are subsequently made available on the AIS portal, enabling taxpayers to disclose relevant information in alignment with AIS data voluntarily.
Compulsory Income Tax Return Filing
Individuals are mandated to file ITR if their income exceeds Rs 2,50,000. However, effective April 1, 2019, ITR filing is obligatory for individuals engaged in specific high-value transactions, even if their income falls below Rs 2,50,000.
Examples of such transactions include depositing Rs 1 crore in one or more current accounts or Rs 50 lakhs in one or more savings accounts in a single financial year.
What Steps You Can Take If Form 26AS Reflects SFT Transactions?
As a first step, it is necessary for a taxpayer to verify the accuracy of the SFT reported in Form 26AS. Subsequently, when filing the ITR, the taxpayer must diligently report the aforementioned high-value transactions and accurately calculate the associated tax liability. Failing to do so or encountering differences in reporting such transactions may lead to issuing an income tax notice.
Launch Of e-Campaign
The Income Tax Department has initiated an e-campaign to encourage voluntary compliance with income tax regulations to enhance taxpayers’ convenience. This campaign targets explicitly two categories of assesses or taxpayers:
Non-Filers Of Income Tax Returns
This campaign focuses on individuals or entities who have not submitted their income tax returns. The initiative aims to encourage and guide non-filers to fulfil their obligation to file returns in compliance with tax regulations.
Assesses Discrepancies/Deficiencies In Returns
The campaign also addresses individuals or entities whose income tax returns exhibit discrepancies or deficiencies. It seeks to facilitate a streamlined process for rectifying and addressing issues related to the accuracy or completeness of previously filed returns.
Who Does The Income Tax Department Send Email And SMS Notifications Regarding E-Campaigns?
Within the framework of e-campaign initiatives, the IT department sends SMS and email notifications to specifically identified taxpayers. The purpose behind these communications is to authenticate their financial transactions, drawing from information sourced by the IT department from diverse channels such as TCS, TDS SFTs, and other pertinent avenues.
The department systematically gathers data related to goods and services tax (GST), import/export activities, and transactions involving securities, derivatives, commodities, and mutual funds, leveraging information provided by various third-party entities.
Individuals are likely to receive an email or SMS as part of an e-campaign under the following circumstances:
Non-filing Of Income Tax Return
If an individual has carried out a high-value transaction in a financial year and has not filed the ITR for that respective year, the IT Department will notify that person through email or SMS.
Existence Of Discrepancies Or Deficiencies In Income Tax Returns
It is crucial to note that discrepancies do not necessarily imply intentional concealment of information; they could arise from errors in the Annual Information Statement (AIS). Taxpayers are encouraged to report such discrepancies to the IT Department using the ‘Providing feedback on AIS’ mechanism.
Steps To Comply And Submit Response To e-Campaign Notice Online
If you’ve received an email, SMS or notice regarding a high-value transaction or non-filing of ITR, you can follow the below steps to submit your responses:
Step 1: Log in to your account on the income tax e-filing website. You must sign up on this platform by submitting the necessary details if you are new to the portal.
Step 2: Once logged in, click on Pending Actions. In the drop-down, select Compliance Portal.
Step 3: Now, select the relevant e-campaign to which you must submit your response.
Upon redirection from the e-filing portal, you will encounter the landing page of the e-campaign view. Choose the pertinent e-campaign and click Provide Feedback in AIS.
If you do not have any active e-campaigns or e-verifications, a message stating “No Compliance Record has been generated for you” will be displayed.
Step 4: Select the relevant information category marked with ‘e.’
Step 5: Once you have selected the information category, you must choose the transaction for which you must submit feedback. Such transactions will be marked as ‘Expected.’
Step 6: Now it’s time to submit your response. You can select the appropriate response from the below list:
- Information is correct.
- Information is not entirely correct.
- Information is not taxable.
- Information is not related to this PAN or year.
- Information is denied.
- Information is duplicated or included in other displayed formats.
Taxpayer Obligations And e-Campaign Categories for Response
The taxpayer is anticipated to respond to the following categories within the e-campaign framework:
- Preliminary response.
- Feedback on the response from the AIS
Preliminary Response
In the Preliminary Response section, taxpayers must address specific inquiries based on the campaign type, which could involve either non-filing an income tax return or certain high-value transactions conducted by the taxpayer.
Here’s a step-by-step guide on responding:
Step 1: Click the Provide Response button in the Preliminary Response section.
Step 2: On the subsequent page, respond by selecting the appropriate options from the provided drop-down menu.
Step 3: Furnish additional details as requested by the income tax department. For instance, if the campaign type is ‘Non-Filing of Income Tax Return,’ you need to provide details such as:
If ITR has been filed:
- Acknowledgment Number: Enter the acknowledgment number generated for the Income Tax Return filed for the relevant Assessment Year.
- Date: Select the date of return filing.
- Mode: Choose the mode of filing (e.g., e-filed or paper-filed returns).
- Circle/ Ward and City: Enter your circle/ward and city.
- Remarks: This is optional. You can choose to leave some remarks related to the filing.
If the ITR has not been filed:
- Reason: Select the reason for not filing the ITR.
- Remarks: Enter remarks for not filing the ITR.
Step 4: After entering all the relevant information, submit the response. You can download the preliminary response submitted from the Activity History screen.
If you do not have active e-campaigns or e-verifications, a message stating “No Compliance Record has been generated for you” will be displayed.
Submit Feedback On Information In AIS
You must offer input on the information within the electronic campaign where feedback still needs to be submitted. Specifically, you must provide feedback on the Level 1 (L1) information indicated as ‘Expected’ in the screenshot
By following these instructions, you can effectively respond to the notice from the income tax department regarding high-value transactions or an incomplete income tax return.
