Recently, the income tax department in India has taken up around 68,000 cases for e-verification. This move has been made in order to help taxpayers revise their annual filings within the stipulated three-year window. According to Nitin Gupta, the chairman of the Central Board of Direct Taxes (CBDT), the exercise is meant to point out the gaps that exist and help taxpayers update their returns, thus reducing litigation. Once an assessee files updated returns, there are fewer chances of their case being picked up for scrutiny or reassessment. As of now, 15 lakh updated returns have been filed, and Rs 1,250 crore has been collected as tax.
The tax department has been running a pilot through a risk management system since September. This system takes up cases based on certain parameters, with only high-value cases being taken up. The risk management system can be revised annually, but the criteria have not been disclosed. However, one of the challenges faced by the department is that several taxpayers have not responded to their communication, which is supposed to be responded to within 10 days. The income tax department has a timeline of 90 days for completing a particular case under e-verification, but complicated cases could take longer. Taxpayers have till March 31, 2023, to file updated returns.
Encouraging taxpayers to view their Annual Information Statement (AIS) regularly, Gupta suggested that taxpayers should give feedback to the department if they see any mismatch. The e-verification scheme is a non-intrusive way of nudging taxpayers to file updated returns in case of a mismatch. It is transparent, without any human interface, and encourages voluntary compliance, which will ultimately help cut down litigation.
In conclusion, it is essential for taxpayers to be up-to-date with their annual filings and keep a watchful eye on their AIS. The exercise carried out by the income tax department through e-verification is meant to help taxpayers avoid any future litigation by updating their returns. It is a step in the right direction towards a fair and transparent tax system that encourages voluntary compliance.