Recently, the Income Tax Department (ITD) has become very aggressive in widening the tax base through identification of stop-filers and non-filers by issuing notices to persons who it thinks may have filed the return. The notice would say,
”The Income Tax Department has received information on financial transactions / activities relating to you. A list of some of the information for Financial Year is provided below. As per records, you do not appear to have filed Income Tax Return for Assessment Years. “
It would then require to login to his/her e-filing portal and furnish the response in the Compliance Module. Then, the person would also be required to print the acknowledgement of response submitted and send a copy to the jurisdiction ITO (Income Tax Officer) within certain days.
Most of tax payers think that the Income Tax Department knows only the transactions that are reflected in their Form 26AS i.e. AIR (Annual Information Report) information and tax information like TDS, Advance Tax, refund, etc. Unfortunately, that is not correct. While AIR is the widely known source, the main source of the information gathering is done through CIB (Central Information Branch).
In 1975, the Income Tax Department formed the Central Information Branch (CIB) for strengthening tax data-base. Since August 2011, to conform to new norms regarding exchange of information and greater transparency by the financial institutions, Directorate of Income Tax (Intelligence & Criminal Investigation) was setup under a DGIT which included the erst while intelligence set up and CIB setup.
CIB report would include information relating to financial transactions like investment, expenses, payment of taxes, etc and details of persons who are involved in some specified activities.
Information Codes and Description:
Following is the list of major information codes and description which may be included in the notice. It will be a good eye opening for a lot of tax payers in India that the ITD is collecting all these information, especially no. 12, 15, 19 and securities transactions. Please note this is only indicative list and includes only major codes.
|1||AIR-001||Cash deposits aggregating to Rs. 10,00,000 or more in a year in any savings account|
|2||AIR-002||Paid Rs. 2,00,000 or more against credit card bills|
|3||AIR-003||Investment of Rs. 2,00,000 or more in Mutual Fund|
|4||AIR-004||Investment of Rs. 5,00,000 or more in Bonds or Debenture|
|5||AIR-005||Investment of Rs. 1,00,000 or more for acquiring shares|
|6||AIR-006||Purchase of Immovable Property valued at Rs. 30,00,000 or more.|
|7||AIR-007||Investment in RBI Bond of Rs. 5,00,000 or more|
|8||CIB-094||Sale of Motor Vehicle|
|9||CIB-151||Transfer of immovable property|
|10||CIB-154||Transfer of capital assets where value declared for the purpose of stamp duty is more than sale value.|
|11||CIB-157||Purchase of Immovable property valued at Rs. 5 lakhs or more|
|12||CIB-183||Time deposit of Rs 1,00,000|
|13||CIB-185||Purchase of Bank Draft of more than Rs. 50,000 in cash|
|14||CIB-321||Share Transactions more than Rs. 20,000|
|15||CIB-403||Investment in Fixed Deposit/Time Deposit exceeding Rs. 2,00,000|
|16||CIB-406||Payment made against Credit Card more than Rs 2,00,000|
|17||CIB-410||Cash deposit aggregating of Rs. 2,00,000 on a day|
|18||CIB-502||Contract of Rs. 10,00,000 or more in the Commodities Exchange|
|19||CIB-514||Interest paid by co operative credit Society|
|20||CIB||Payment in connection with foreign travel amount exceeding Rs. 1,00,000 at one time|
|21||CIB||Payment to Hotel and Restaurants exceeding Rs. 1,00,000 at one time|
|22||EXC-002||Turnover from services reported in Service Tax Return|
|23||FRM-15CA||Remittance to a non-resident or to a foreigh company (Form 15CA)|
|24||STT-01||Purchase of equity share in a recognized stock exchange|
|25||STT-02||Sale of equity Share (settled by actual delivery or transfer) in a recognized stock exchange|
|26||STT-03||Sale of equity Share (settled by otherwise than by the actual delivery or transfer) in a recognized stock exchange.|
|27||STT-04||Sale of option in securities (derivative) in a recognized stock exchange|
|28||STT-05||Sale of Futures (derivative) in a recognized stock exchange.|
|29||TDS-92B||TDS Return – Salary to Employees (section 192)|
|30||TDS-94A||TDS Return – Interest other than interest on security (section 194A)|
|31||Any Tax paid / TDS deducted|
What to Do?
- DO NOT IGNORE such notice
- Contact your CA or us for understanding the requirement/implications
- Complete the steps as mentioned in the notice