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HomeNation₹1,250 cr additional tax deposited by filing updated ITRs: CBDT

₹1,250 cr additional tax deposited by filing updated ITRs: CBDT


New Delhi: Tax authorities have collected about 1,250 crore in additional revenue through a digital compliance system that allows taxpayers to correct errors or omissions in previous income-tax returns, the Central Board of Direct Taxes (CBDT) said.

1,250 cr additional tax deposited by filing updated ITRs: CBDT

The system of updated returns was introduced in this financial year to March and the income-tax department has received roughly 1.5 million updated returns, CBDT chairman Nitin Gupta said on Monday.

While there is no penalty in updating ITRs, one has “to pay an additional tax of 25% in the first year and 50% in the second year while updating your return,” according to a FAQ on the income-tax department’s website.

Updating tax returns is part of the government’s recently launched e-verification scheme to facilitate voluntary compliance. The scheme aims to share and verify financial transactions with the taxpayer that appears to be either unreported or underreported in the ITR filed. “The entire purpose is to clean the data,” Gupta said.

The e-verification and the updated return “go hand-in-hand” because once there is an e-verification and discrepancies are found, a window available to the taxpayer is to file an updated return, if the assessee is admitting the default, he added.

In case the taxpayer is confident about the data the assessee has filed in the ITR and does not accept the error, the case goes for verification. After due diligence, a verification report is prepared and uploaded for further risk management, he said.

All replies of taxpayers are considered to resolve any data mismatch, said a senior official, who did not wish to be named. While the verification report is not visible to assesses, the process allows the department to communicate discrepancies with the taxpayer.

“After looking at the entire evidence, if explanation is found satisfactory, then a communication will go (to the taxpayer),” the official said. “So that the taxpayer knows that there is a closure to this matter.”

“But, for some reason if the explanation is not found verifiable and a mismatch continues, then the taxpayer will be nudged that the mismatch continues; you may like to update the return,” the official added.

So far, the CBDT has picked up 68,000 cases for not reporting transactions or underreporting values of such transactions, Gupta said. These ITRs are for 2019-20 financial year and they could be corrected or updated by March 31. The e-verification scheme was notified on December 13, 2021, and a pilot was launched in September 2022.

According to Gupta, taxpayers can view their transactions in the annual information statement and match it to avoid mismatch while filing their ITRs. The statement is available online to all assesses.

“The AIS is a comprehensive report generated by the income-tax department that contains information about taxpayers gathered from various sources,” said CA Tarun Kumar, direct tax head at Coherent Advisors, a financial consultancy. “To access the AIS, taxpayers need to log in to the e-filing portal and navigate to the Services tab.”

“The AIS and TIS (Taxpayer Information Summary) provide a complete 360 degree view of a taxpayer’s financial transactions, ranging from interest on deposits, dividends, securities transactions, mutual fund transactions, foreign remittances, and interest on savings accounts,” he said.

If a taxpayer has not filed a return or underreported her income in the original ITR, the only viable option is to file an updated return, as the deadline for filing the original and belated return of income has already passed. “However, a taxpayer can file an updated return within 24 months from the end of the relevant assessment year, even if they have not previously filed a return for that year,” Kumar said.

“The entire process of e-campaign and filing an updated return is electronic,” he added. “It ensures compliance among taxpayers and eliminates the need to physically visit the income-tax department.”



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