The taxman has been watching you. Over time- and as technology and compliance has gone up- the income-tax department doesn’t depend on just your ITR to ascertain if you need to file your returns and pay taxes. The tax department has many resources and data on hand to ascertain that.
For instance, the department analyses information received from your employer, the statements of financial transactions (SFT) that your finance companies like banks mutual funds and so on furnish regularly about their customers, the Centralised Information Branch (CIB), tax deducted and collected at source (TDS and TCS) statements, Securities Transaction Tax (STT), and so on.
After analysing the available information, if the tax department believes that the person should have filed her return but the same has not been filed, they will send emails and text messages to taxpayers, asking them to clarify why they still haven’t filed their IT return. Archit Gupta, Founder and CEO, ClearTax says: “Individuals who either have high value transactions or TDS entries in Form 26AS but have not filed their tax return are likely to receive such notices. They must file their ITR if applicable.”
To give a fair chance to the respondent, the tax department also lays down possible reasons on the website for the taxpayer to chose, to be able to give an informed response.
To be sure, a tax payer is not required to file income tax return if the total income is below the basic exemption limit of Rs 2.5 lakh in case of an individual below the age of 60 years, up to Rs 3 lakh for individuals between the age of 60 years to 80 years and Rs 5 lakh for those above the age of 80 years.
Don’t confuse it with the “nil” or “zero” tax liability, which arises due to the rebate under section 87A of Income tax Act 1961 for incomes up to Rs 5 lakh, irrespective of the age of assesses. A rebate is the amount of tax the tax payer is not liable to pay. But to claim this rebate, you must file your tax returns.
How to reply?
If you have received any messages or emails related to compliance asking you to respond, here’s what you need to do:
- Log on to the compliance portal àhttps://compliance.insight.gov.in. OR https:// incometaxindiaefiling.gov.in
- Access your e-filing account.
- Under the head ‘My Account’, click ‘Compliance portal’
- You will, then, be redirected to this section.
- Once you are on “Compliance portal,” click on “e-Campaign.”
- You will see the list of compliance details that are pending to be responded to, like e-Campaign significant transactions, e-Campaign Non-filing of return, e-Campaign high value transactions.
- Here, if you see “F.Y. 2019-20 pending,” below the e-Campaign non-filing of return, that’s where you need to respond. Click on it.
- You will now see a few options; e-Campaign response on filing of income tax return and e-Campaign Information confirmation.
- If you click on ‘e-Campaign response on filing of income tax return’ option, you will be asked to choose from two options; 1) whether income-tax return has been filed or not filed.
- If you opt by selecting the ‘ITR has been filed’ response, the tax department will close the case only after verifying that the taxpayer has indeed filed the return. Remember, if any discrepancy is found, you will receive a notification to provide the correct acknowledgement number.
- If you choose ‘ITR has not been filed’ option, then you will have to provide the reason for not filing the return. For instance; if the reason is that her income was below the basic exemption limit, then say it.
As mentioned above, you may receive a notice based on the high-value transactions done by you during the year, which may not be in line with your earnings in that year. However, if the same expenditure has been done through exempt income or through past accumulated savings and you think this is the legitimate reason for not filing the return, then you can choose the reason from the drop-down options to submit such responses.
The tax department has made the process simpler in recent years. But it’s best to consult your chartered accountant if there is any confusion. Just make sure to respond to such notices within the due time mentioned in the notice. “Usually this notice needs to be responded to within 30 days,” said Gupta.
Do not ignore or avoid responding to the messages and email of ITD, where it asked you to do so. Non-compliance of an ITD message and notice can attract penalty, beside penal interest on the due taxes and prosecution.