Frequently Asked Questions (FAQs) Regarding the e-Verification Scheme 2021.
Synopsis:
e-Verification Scheme – Step to Voluntary Tax Compliance in India
I. The FAQs pertaining to the e-Verification Scheme 2021 (referred to as ‘FAQs’) are designed to offer general guidance on comprehending the procedures and processes outlined in the e-Verification Scheme 2021, as per Notification no. 137/2021 dated 13.12.2021. These FAQs are presented in a simple and understandable manner, avoiding the technical jargon of the Income Tax Act wherever possible.
II. These FAQs are intended for informational and advisory purposes, subject to updates as necessary. They should not be utilized as a foundation for legal interpretations of the e-Verification Scheme 2021 or the Income Tax Act, 1961. Taxpayers are encouraged to make informed decisions on their tax matters.
FAQs for e-Verification Scheme 2021 :
1. Where can I review my financial transactions reported to the Income Tax Department by Sources/Reporting Entities?
Answer: The financial transactions, including those attracting TDS/TCS, immovable property transactions, bank deposits, and investments, can be viewed in the AIS portal of your income tax account for FY 2020-21 onwards. Follow these steps:
a) Log in to the e-filing portal
b) On the home page, click the “Services” tab.
c) Select “Annual Information Statement (AIS)” under the “Services” tab to access the AIS portal.
d) Choose the relevant Financial Year and click on “Annual Information Statement” to view the transactions.
2. What should I do if I identify an incorrectly recorded transaction or one that does not pertain to me?
Answer: While viewing information under AIS, click on the specific information, and use the feedback button on the right side to provide feedback.
3. What happens after I raise an objection to any transaction reported in AIS?
Answer: Income Tax Department regularly initiate a process of contacting the Source/Reporting Entity which reported the information/transaction and will seek confirmation about the correctness of the data.
Once this process is rolled out then:
i. If the Source/Reporting Entity agrees that there has been a mistake, the data will be corrected in due course of time after the Source/Reporting Entity files its corrected statement. This process is done through an automated Information Technology driven procedure.
ii. If the Source/Reporting Entity stands by the data and does not support your objection, further explanation/evidence will be called from you under the e- Verification Scheme which is explained in the following questions.
4. What is the e-Verification Scheme, 2021?
Answer:
i. When a financial transaction reported by a Source/Reporting Entity is not considered while filing your Return of Income, a computerized process identifies the mismatch.
ii. The Source/Reporting Entity is contacted to confirm or correct the information.
iii. If confirmed, e-Verification proceedings are initiated for the taxpayer, including issuing a notice u/s 133(6) through the Compliance Portal.
5. What is the usefulness of the e-Verification Scheme, 2021?
Answer: The scheme facilitates voluntary compliance by:
• Correcting inaccuracies in data provided by Source/Reporting Entity.
• Informing the taxpayer about missed transactions.
• Providing an opportunity to correct omissions in the Return of Income before further actions like Assessment or Re-assessment.
6. Is the e-Verification Scheme the same as e-Verification of return?
Answer: No, the e-Verification Scheme is distinct from the e-Verification of return, which is the final step in the return filing process. After filing the income tax return (ITR), you need to verify it to complete the return filing process. Without verification within the stipulated time, an ITR is treated as invalid. e-Verification is the most convenient and instant way to verify your ITR. You can e- Verify your return online using OTP on mobile number registered with Aadhaar, net banking, digital signature etc.
The e-Verification Scheme 2021 is totally different from e-Verification of return.
Answer: The notice is visible in the Compliance Portal (https://eportal.incometax.gov.in). Follow these steps:
a) Log in to the e-filing portal
b) Go to “Pending Actions,” click “Compliance Portal,” and select “e-Verification.”
c) Choose the applicable Financial Year.
d) Click on the ‘DIN’ to download the notice.
e) Click on ‘Submit’ to provide the response, including remarks and supporting documents.
8. If the Compliance Portal appears blank while responding to the notice, what should I do?
Answer: Enable ‘pop-ups’ in your web browser’s ‘Privacy and Security’ settings.
9. How do I know if a notice under e-Verification has been issued to me?
Answer: The notice will be visible on your e-filing portal account on incometax.gov.in. It will also be emailed and sent via SMS to your registered email and mobile number.
10. What should I do if I have difficulty accessing the Compliance Portal?
Answer: Log a complaint at the helpdesk for the “Compliance” portal by calling 18001034215.
11. How does the taxpayer verify the genuineness of the notice received?
Answer: The taxpayer will be enabled to verify the DIN from the e-portal and see if the notice is genuine by clicking on the Authenticate Notice/Order Issued by ITD link in the Quick Linkssection found in the e-portal and following the process as mentioned in the e-portal.
The taxpayer has to furnish the response to the notice only through the Compliance Portal of the Income Tax Department and not through email. The instructions for furnishing the information are mentioned in the Annexure-2 of the notice issued to the taxpayer.
12. While responding to the notice, if the attachment size exceeds 10 MB, what should I do?
Answer: Large documents can be split into parts of less than 10 MB each and attached separately.
13. What happens if my explanation is found satisfactory?
Answer: A communication will be sent, stating that no further clarification is presently required.
14. What happens if the explanation is not found satisfactory?
Answer: If the explanation is not found satisfactory, the e-Verification proceedings will be concluded with a communication to the taxpayer informing: “The explanation is not found sufficient to explain the mismatch in the specific information and the taxpayer may consider updating the return of income u/s 139(8A) of the Act, if eligible.” Subsequently if the taxpayer does not Update the Return of Income within the due time, Income Tax Department will undertake risk-assessment based initiation of proceedings like Assessment or Re-assessment which could lead to tax demand and penalty etc.
15. What can I do if I realize that I missed a transaction while calculating my income?
Answer: You may consider Updating your Return of Income under Section 139(8A) of the I.T. Act, 1961, if eligible, by paying tax on the missed income along with additional tax to avoid further proceedings in the form of assessment/re-assessment which could lead to tax demand and penalty.
16. Can I respond to the notice u/s133(6) by stating that I have updated my return?
Answer: Yes, explicitly state in the response that the return has been updated, and the Income Tax Department will verify.
17. Do I need to pay any penalty while updating my return?
Answer: No penalty is imposed, but an additional tax of 25% (first year) or 50% (second year) is payable.
18. Is a physical hearing possible under the e-Verification Scheme?
Answer: No physical hearing is allowed. Responses must be filed online, with a provision for video conference in exceptional cases (under development).
19. Why should I update my return?
Answer: Updating allows you to pay tax on previously unreported income, avoiding further proceedings under the IT Act.
20. What is an updated return, and how is it useful?
Answer: Finance Bill 2022 has inserted a new section, Section 139(8A) in Income Tax Act. This new section provides for filing of ‘Updated Return’ by the taxpayers. The taxpayer can file an updated return within two years from the end of the relevant Assessment Year. So during the current financial year 2022-23, taxpayers can file ITR-U for AY 2020-21 and AY 2021-22. i.e., the return for FY19-20 can be updated till 31st March 2023.
Updated return can be filed irrespective of the fact, whether the original return was filed by the taxpayer or not. However, to file an updated return, the taxpayer has to meet the conditions prescribed in section 139(8A) of the IT Act 1961, including:
- The updated return can be filed only if the taxpayer has to disclose any additional income, which was missed / omitted earlier, and pay the additional tax thereon.
- Updated return cannot be filed to reduce any income and report loss or increase the loss thereby resulting in reduction of tax liability or increase in tax refund.
- The option of updated return can be opted only once for one assessment year.
- If the updated return is being filed within 12 months from the end of the relevant assessment year, then an additional income tax of 25% and interest thereon shall be payable. If the return is filed within 24 months, from the end of the relevant assessment year, then an additional income tax of 50% and interest thereon shall be payable.
- This facility of filing an updated return can also be viewed as an opportunity to disclose the earlier missed income and pre-empt further proceedings under the I.T. Act.
21. How is the e-Verification Scheme different from scrutiny assessments/reassessments?
Answer: This is primarily a preliminary verification based on the information received by the IT Dept from various reporting entities. No order is required to be passed in this case because this is not a notice for assessment or reassessment. This is only for verification. Once information is verified as correctly reflected in ITR, further steps may not be taken by the Income Tax Department with reference to the specific information verified. If information is not included in the return of income, then the taxpayer can update the tax return as mentioned above.
22. What should the taxpayer do if information provided by the Income Tax Department is not correct?
Or
What should I do if the duplicate entries are there in notice received by me under the e-Verification Scheme?
Answer – If you go through the notice and find that the information as mentioned in the notice does not belong to you or is a duplicate entry or is incorrect (fully or partially), you should clearly state the same in the response filed on Insight and provide supporting evidence for the same, where applicable. The Income Tax Department would then confirm with the source the veracity of the information and take appropriate action.
23. What if you agree to the mismatch between return of income and information explained to you in the notice u/s 133(6) of the IT Act, 1961, under e-Verification Scheme?
Answer – The taxpayer can update his ITR under section 139(8A) of the Act, and pay the additional taxes. A response can be submitted that the mismatch is accepted and ITR has been updated or will be updated.
Answer – Common reasons of Tax Notice:
- Response of Taxpayer is to be submitted on compliance portal which is accessible via e-filing portal. Other portals of Income Tax Department are for other specified compliances and will not accept responses to notice under e-Verification Scheme.
- Web browser used by the taxpayer is not updated to the latest version and hence the website is not supported by the browser.
- POP-UP Blocker of the web browser is enabled and it is blocking the access to the response window.
What are the consequences of inaccurate information or explanation
The consequences of providing inaccurate information or an inadequate explanation in the context of the e-Verification Scheme 2021 are significant and can lead to various legal and financial repercussions. Based on the information in the original FAQs, these consequences include:
1. Tax Reassessment: If the explanation provided for discrepancies in your financial transactions is found to be unsatisfactory, the tax authorities may proceed to reassess your tax liability. This reassessment could result in a determination of additional tax owed.
2. Demands and Penalties: Following a reassessment, if additional tax liability is determined, the tax department may issue tax demands. Furthermore, penalties may be levied for the non-disclosure or inaccurate disclosure of financial transactions. These penalties could be substantial, depending on the nature and extent of the inaccuracies.
3. Legal Proceedings: In cases of significant non-compliance or fraudulent reporting, legal proceedings may be initiated. This could include prosecution under relevant sections of the Income Tax Act, which can lead to further financial penalties and, in severe cases, imprisonment.
4. Impact on Future Tax Filings: Providing inaccurate information or explanations can flag your account for closer scrutiny in future tax filings. This heightened scrutiny can lead to more frequent audits or verifications in subsequent years.
5. Damage to Creditworthiness: Persistent issues with tax compliance can affect your creditworthiness, making it difficult to obtain loans or other financial services.
It is crucial for taxpayers to ensure that all information provided to tax authorities is accurate and complete, and that any discrepancies or mismatches in financial transactions are appropriately explained. The e-Verification Scheme 2021 aims to streamline the process of identifying and rectifying such discrepancies to ensure compliance and accuracy in tax filings.
What to do if i acknowledge my mistake? How to rectify it? Whether I have to email it to my Income Tax Officer or to meet him personally?
If you acknowledge a mistake in your tax filings under the e-Verification Scheme 2021, the process for rectifying it is quite straightforward and does not typically require emailing or meeting your Income Tax Officer in person. Here’s what you should do:
1. Update Your Income Tax Return:
– If you realize that you have made an error or omission in your income tax return, the first step is to file an updated return. This can be done under Section 139(8A) of the Income Tax Act, which allows you to declare additional income or correct omissions. This provision permits filing an ‘Updated Return’ within two years from the end of the relevant assessment year.
2. Online Response to the Notice:
– If you received a notice under the e-Verification Scheme due to the discrepancy, you should respond to it through the online e-filing portal. Acknowledge the mistake in your response and inform the authorities that you have filed an updated return to correct the error.
3. Pay Any Additional Tax Due:
– If the correction in your return results in additional tax liability, make sure to pay the due tax. Remember, there might be additional tax of 25% or 50% applicable, as per the norms of the updated return filing under Section 139(8A).
4. Submit Necessary Documents:
– Attach any relevant documents or evidence that support your updated return or the explanation provided in your response to the notice. This documentation can be submitted online through the e-filing portal.
5. Avoid Physical Meetings:
– The process is designed to be conducted online, and in most cases, there is no need to email or meet your Income Tax Officer in person. The e-Verification Scheme aims to minimize physical interactions and streamline the process digitally.
6. Use Compliance Portal for Communication:
– All communications regarding the e-Verification Scheme, including responses to notices, should be done through the Compliance Portal, which is accessible via the e-filing website.
7. Monitor Your Account for Updates:
– After you have responded and made necessary corrections, keep an eye on your e-filing portal account for any updates or further communication from the Income Tax Department.
By following these steps, you can rectify mistakes in your tax filings efficiently and in compliance with the Income Tax Department’s procedures. It’s important to address any discrepancies promptly to avoid potential penalties or additional scrutiny in the future.
What to do if I identify that any particular transaction do not pertain to my business or my account? How can I deny it to Income Tax Department? whether I have to contact income tax officer personally or to email them?
If you identify a transaction reported to the Income Tax Department that does not pertain to your business or your personal account, you can take the following steps to deny or dispute it:
1. Submit Feedback through AIS on e-Filing Portal:
– Access the Annual Information Statement (AIS) on the e-filing portal of the Income Tax Department. If you notice any transaction that does not belong to you or your business, use the feedback mechanism provided next to the transaction in the AIS. This is the primary method for reporting discrepancies or incorrect transactions.
2. Provide Detailed Feedback:
– When providing feedback, be specific about why the transaction does not relate to you. If possible, provide supporting evidence or documentation that substantiates your claim.
3. Online Response to Notices:
– If you receive a notice regarding the transaction under the e-Verification Scheme, respond to it online through the e-filing portal. Clearly state that the transaction in question does not pertain to you, and provide any relevant details or evidence.
4. No Need for Personal Contact:
– Generally, there is no need to contact your Income Tax Officer personally or via email for this matter. The e-Verification process is designed to be handled online for efficiency and transparency.
5. Document Your Communication:
– Keep records of all your communications and submissions regarding the disputed transaction. This includes screenshots or printouts of the feedback submitted and any responses to notices.
6. Monitor for Resolution:
– After submitting your feedback or response, monitor your account on the e-filing portal for any updates or further requests for information from the Income Tax Department.
7. Use Helpdesk if Needed:
– If you encounter any issues or need assistance, use the helpline or customer support services provided by the Income Tax Department. They can guide you through the process or address any technical issues.
8. Patiently Await the Outcome:
– The resolution of such disputes may take some time as the Tax Department verifies your claim with the reporting entity. It’s important to be patient and check for updates regularly.
By following these steps, you can effectively communicate and resolve any issues regarding transactions that do not pertain to you with the Income Tax Department. Remember, the process is largely digital, and personal meetings or emails to tax officers are typically not necessary unless specifically requested by the Department.