View quick summary It is recommended that you file your tax return or revise it, stating all sources of income for the Financial Year 2009-10 and 2010-11 at the earliest.
“Income Tax Department is watching you!” It’s the warning tag-line of the drive spearheaded by the I-T Department to verify high value transactions that took place during the financial years 2009-10 and 2010-11. Gone are the days when identifying a tax evader was like finding a needle in a haystack. With critical technology advancements, the tax man is now keeping a close tab on the records of every tax payer. As a word of advice to all defaulters, the I-T department has cautioned them by giving an opportunity to file their correct return for the financial year 2009-10 and 2010-11. So, just in case you feel there may be any income you have not declared, you can still avoid the penalty of thrice the tax evaded.
I-T Department Scans High Value Transactions
The Income Tax department has gathered 22,52,06,979 different pieces of information around high value transactions made by taxpayers. The idea is to identify taxpayers who have understated their income. The top four high value transactions coming under the scanner for the Financial Year 2009-10 and 2010-11 are:
1. House property: The I-T department has identified 6,23,384 people who purchased or sold property with value above Rs 30 lakh. If you purchased a house property during the financial year 2009-10 or 2010-11 using undisclosed income, you can still revise your tax return and declare all income for that year by March 31, 2012. Similarly, if you sold your home and forgot to include the profit in your return, avoid the penalty by acting now.
2. Cash Deposit: The data collected by I-T department includes 27,50,545 people for depositing cash over Rs 10 lakh in savings accounts during the said financial years. If you have deposited cash in your savings account, ensure that you declare the sources of this cash income.
3. Mutual fund or shares: Identification of 33,21,695 people, who have purchased mutual funds over Rs 2 lakh, bonds over Rs. 5 lakh or shares over Rs 1 lakh, has been done. The Income Tax department can inquire about the source of money invested in these instruments. Failing to provide information about the same can invite penalty.
4. Credit card payments: Ofthe information gathered, 15,23,728 people have been identified making payments of Rs 2 lakh or more through credit card. The source of credit card payments will be verified.
How to Avoid the Hassle of Dealing with ITD
The PAN number can reveal a taxpayer’s finance trail because this number is linked with your bank account, stock exchange/broker, registrar of properties, etc. If you wish to disclose any undisclosed income, the Income Tax department wants you to take note of the following:
- You conceal income when you do not declare income from all sources or declare income less than the actual amount. For example, non-reporting, in the ITR, of capital gains made by selling house property will be termed as concealment of income.
- You can file a revised return in case you want to make changes to the original return. Revised return can be filed only if the original return has been filed before due date. For example, if you have filed ITR for the F Y 2009-10 on/before 31st July 2010, and now wish to declare rental income which you forgot to document while filing the original return, you can revise it before 31st March 2011 or before the assessment by ITD, whichever is earlier. Income Tax Returns can be revised any number of times. You will need the acknowledgement number and date of filing of original return in order to file a revised return. A revised return makes the original return deemed cancelled or not filed.
- You must file the ITR even if the TDS has been deducted from salary and no other income is earned. Even if you’ve not been able to file the return by due date, it can be filed till March 31 of the next financial year. In such a case, no penalty will be imposed for not filing the return by due date.
Other payments that are likely to be inspected in future are those towards LIC policy, post office deposits, gold purchase, etc. Cash payments made and cheques received in these cases are 100% tax free. This cycle is used to convert black money into white. The shockwave phase has already begun with the ITD already sending notices to confirm the source of money used for purchase of house property, mutual funds, shares, bonds or payment of credit cards. The drive by the Income Tax Department conveys a clear message – It’s better to be safe, than sorry.
Income tax compliance can become tricky. To ensure a strong guard against penalty by the I-T Department, you need professional assistance to interpret intimations and respond to them appropriately. TaxOptimizer service – a full year subscription – does exactly this, apart from helping you minimize your tax payment and file ITR after consulting a dedicated Chartered Accountant. For details, write to email@example.com