Off late many Individuals have been receiving SMS from the Income Tax Department. No, the ITD doesn’t want to become your texting pal… Rather, the SMS’ dictates that their PANs have been flagged in lieu of not filing their ITR. Sure enough, many traders were baffled by it. No matter how confusing it might seem, there is an explanation and a way out of it.
This is a snippet of SMS sent out to Individuals for non-filing of ITR. If you received an SMS as well, it might be advisable to understand why you received it.
As for the individuals, many complained that their taxable income was way below the slab rates. Still, they were unable to explain why they received this SMS. Any Individual who received an SMS from the ITD, must fulfill these Conditions.
Condition 1:
For F.Y 2019-20, the due date to file the Original Income Tax Return was extended to 10th January 2021 (when tax audit is not applicable) and 15th February 2021 ( when tax audit is applicable). However, a Belated Return (with the due penalty) can be filed up to 31st March 2021. It won’t hurt being on the good side of the law, and also the Taxman won’t allow non-filers to fly free. Ergo, an SMS on their registered number was sent out causing confusion and chaos.
Condition 2:
Apart from the explanation above, there might be another possible explanation.
You see, Taxman (more like Sherlock) is keeping close tabs on our transactions. Apparently, data of the taxpayer’s tradings transaction can be viewed on the e-compliance portal. Also, ITD has access to the information of your transactions through AIR Reports (Annual Information Return), STT Reports (Securities Transaction Tax Report), CIB (Central Information Branch), and the recent data parnterships CBDT has done with a SEBI, CBIC and MoMSME.
AIR
Annual Information Returns (AIR) are reports submitted to the ITD by your Bank or financial service in case of any High-Value Transaction. So, if you have exercised any of these High-value Transactions, an AIR of your transactions was submitted to the ITD.
Most people might not know that there are seven AIR Codes. These Codes represent different types of transactions and activities. For instance, an individual investing in Bonds or debentures can be reported by AIR 05. similarly, if an individual invests in shares worth INR 1 Lakh or more, it is reported to the ITD under AIR 06.
STT Report
STT Report is submitted by the Exchanges to the ITD to report the information related to trading transactions of securities on which STT (Securities Transaction Tax) is paid. Following are the types of STT Reports:
Similar to AIR, there are five STT codes. These codes represent an Individual’s trading activity. For example, ITD will be intimated by STT 01 if an individual purchased equity shares from a recognized stock exchange. Even when one decides to sell their equity shares, STT 02 will be initiated to the ITD.
CIB
Apart from these two ways, the ITD also receives reports from the Central Information Branch (CIB). There are 14 criteria under CIB. If an Individual falls under any of these criteria, ITD is notified.
There are 14 CIB Reports that include several financial activities. ITD is notified when any Individual conducts any of these activities. Even, when you sell your vehicle, ITD is notified by the code CIB 94. So much so that Time Deposits of INR 1 Lakh or above are classified by code CIB 183.
So, there are several methods through which the ITD can keep track of your financial activity. And when the details in your ITR don’t match with these Reports, ITD notifies you through e-mail and SMS.
P.S. If you wish to learn more about Which Transactions fall under AIR, CIB, STT Reports, feel free to check our article: Notice for Non-filing of ITR: Submit Response on E-Compliance Portal
Now what?
Okay, you received an SMS, Now what? So, turns out that there are two actions that need to be taken.
Action 1: File a Belated/Revised Return
A no-brainer… file your belated return (if you haven’t filed the ITR already) or a revised return (if you have file the return, but didn’t report all your financial activities) before 31st March. If you have already done that, you would be required to go to the Income Tax Department’s Website, and under the e-campaign section enter the response and mode of filing ITR, acknowledgments, and date.
However, in case you have not filed ITR, you should be able to justify your action with an appropriate response and logic. Quicko helps traders stay tax compliant, you can check your options here.
Action 2: File Response under e-Compliance
If you have already filed your return, you might as well confirm the information reported on your PAN by choosing the appropriate option under the e-campaign section on the Income Tax Department’s Website. Using this information, the ITD will take the appropriate action.
So all in all, these steps should address the issue. Apart from that, as a responsible citizen, filing our Income Tax Returns on time should be a moral priority.
Got questions? We are here to answer them all! Shoot’em on TaxQ&A below
Hey @TeamQuicko
What is the time limit in which I need to respond to the notice under section 139(9)?
How can I respond to the notice received online?
How much time it will take to process the refund once response to notice u/s 139(9) is filed?
Hey @HarshitShah
It is very common to receive a notice from the Income Tax Department. The notice sent to you might be a routine inquiry or a request for clarification. There is no need to worry when you get a notice from the Income Tax Department. You will have 15 days time in which you will need to respond to the notice/file revised ITR.
Hope this helps!
Hey @SonalYadav
You can login to your account on the Income Tax e-filing website by entering your credentials i.e. User ID (PAN), password, and captcha code.
Next, you need to click on the ‘e-file’ tab and select ‘Response to outstanding Tax Demand’ option.
Hope this helps!