As taxpayers gear up for year-end festivities, the unexpected arrival of messages from the Income Tax Department has stirred concerns. These alerts, aimed at notifying individuals about potential non-disclosure of high-value transactions, encompass various financial activities, from property transactions to foreign investments and capital gains on equity shares.
Understanding the Notices:
Nature of Alerts: The messages primarily highlight possible lapses in disclosing substantial financial transactions, such as property sales or purchases, investments exceeding Rs 10 lakh in mutual funds, and profits accrued from equity shares’ sale.
Intent Behind Alerts: The Income Tax Department clarified that these messages were dispatched to prompt taxpayers to either provide feedback on the official return-filing portal or revise their returns, ensuring the inclusion of any undisclosed transactions by December 31.
Transactions Under Scrutiny:
Property Transactions: Taxpayers involved in property dealings have predominantly received these intimations, along with individuals engaged in delivery-based share trading, generating capital gains.
Scope of Alerts: It’s worth noting that some individuals, despite disclosing transactions in their Income Tax Returns (ITR), received these messages due to the system flagging details from their Annual Information Statement (AIS).
Cautionary Measures Advised by Experts:
Advisory as Mini Notice: Tax experts liken these intimations to cautionary notices, emphasizing their significance. Neglecting such alerts might lead to more formal Income Tax notices in the future.
Foreign Transactions Impact: Notably, minors and individuals involved in foreign investments or trips have also received notifications, triggering compliance emails despite not being required to file tax returns.
Response and Compliance:
Urgency in Response: While there’s no need to panic, prompt action is advised. Discrepancies between the AIS data and filed returns could potentially complicate tax processing.
Responding to Notices: Taxpayers are encouraged to respond through the Income Tax Department’s compliance portal. Feedback submissions or revision of previously filed returns can be pursued until the December 31 deadline for the assessment year 2023-24.
Implications of Non-Compliance:
Interest and Penalties: Failure to address these notices may lead to closure of the response window post-December 31, 2023. Subsequently, taxpayers might be liable to pay interest on any undisclosed income, commencing March 31, 2023, or during the advance tax period when it should have been paid.
Late Submission Implications: Submitting an updated return post-deadline could incur additional taxes—an extra 25% within 12 months and 50% beyond 24 months from the initial return filing date.
Steps to Mitigate:
Feedback and Revision: Responding through the compliance portal or revising filed returns offer avenues to rectify any discrepancies.
Review and Action: It’s crucial to review the AIS data against filed returns to ensure accurate and comprehensive disclosures, minimizing potential complications in the tax assessment process.
While these notifications might initially instigate concern, addressing them promptly through the Income Tax Department’s designated portal or revising returns by the stipulated deadline can avert future complications. Ignoring these alerts could lead to additional taxes, penalties, and prolonged tax-related hassles, making timely compliance essential for taxpayers.