Notices of High Value Transactions: What taxpayers need to do?

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Notices of High Value Transactions: What taxpayers need to do?

In the last 3 days, the Income tax department has forwarded numerous messages asking taxpayers to pay advance tax on the basis of High Value Transactions. All such High Value Transactions are displayed in Form 26AS.

The message forwarded reads as under:

“Attention (Name of the Assessee) (PAN XXXXX- –  – -X), Income Tax Department has received information about certain high value financial transactions relating to FY 2020-21. Please view transactions under e-Campaign tab on Compliance Portal (CP) and remember to pay appropriate advance tax. Access CP by logging into e-filing portal and clicking on ‘Compliance Portal’ link under ‘My Account’ tab – ITD”

The taxpayers are surprised with this sudden message and are under confusion as to the line of action to be followed in such cases. This messages are messages of high value transactions which is reported by various reporting Authorities like Mutual Fund house, banks, Registrars of stamp duty, companies who are mandatorily required to intimate high value transactions to the Director of Income-tax (Intelligence and Criminal Investigation) by filing Form 61A commonly referred to as Statement of Financial Transaction. In addition to this, in view of the pact signed by CBIC and CBDT, the sale transactions as reported in GST returns are also getting shared with the Income Tax Department and the same is also forming the part of high value transaction if it is above certain specified threshold.

On the basis of such information as received by the IT department, they have forwarded the messages to the taxpayers to calculate whether they have paid commensurate advance tax or not.

One thing is sure that the data base of the income tax department has been very vast so as to capture multiple transactions of the taxpayers. It is always for taxpayers to respond to such messages so that the department doesn’t move forward to further send notices to the taxpayers and unwanted action from the department can be avoided.

For compliance, taxpayers have to login to the income tax account and reply to compliance option at the Menu in which one has to click the “Compliance portal”. Once taxpayers click at the compliance portal, another window is displayed which have various options. One has to click below “Significant Transactions” at the “e-compaign” wherein at the bottom, “FY 2020-21 pending” is shown.

In general, the following are the high value transactions which is mentioned and the compliance is sought by the taxpayers:

  1. Business transactions
    a) It is showing the transactions of purchase as is filed by the other parties.
    b) Transactions reported in GSTR return as sales which also reflected in form 26AS is also getting displayed hereB) tds deducted– for eg: it says you have deducted tds @ 10% of rs.8Lakhs, it means you have paid 80Lakhs. Please pay advance tax. Likewise there may be many transactions like-
  2. Property Transactions:
    purchase & sale of property will also appear as high value transactions and will require confirmation from the taxpayers.
  3. Cash withdrawn from Bank:
    Cash withdrawn from banks & post office is subject to TDS u/s 194N w.e.f. 1st june 2020. If any person withdraws cash above Rs 20 Lakhs or Rs 1 crore based on their income filing status, TDS @ 5% or 2% is attracted.
  4. Deposit of Cash in bank account:
    Banks are required to report if a cash deposit or fixed deposit is made in a bank account of rs.10 lakhs or more in all bank accounts and rs.50 Lakhs made in all current accounts.
  5. Other Transactions:
    Similarly, purchase of debentures or bonds, investments made in shares and mutual funds, buy back of shares by company, purchase of foreign currency of rs.10 Lakhs or more, payment made against credit card transactions of Rs.10 Lakhs or more, are also considered as high value transactions if it is above certain basic threshold.

What Taxpayers are expected to do whenever they have received such High Value Transactions Messages?

Though not mandatory, it is always advisable to respond to such messages for the reason already discussed above.

There are following options for responding to the above at the compliance portal.

  1. Bulk response- information is correct or Information is denied
  2. File individual transaction reply as under:
    Information is correct or
    Information is not fully correct
    Information relates to other – Person/year
    Information is duplicate / included in Other displayed information
    Information is denied

Taxpayers now need to be regular in maintaining the books of accounts so as to verify the above high value information from its books of accounts. The database of every taxpayer is with the department and this taxpayer must know now. Taxpayers must verify its record before it confirms or declines the above transactions. Responding to above information requires equivalent & proper book keeping by the taxpayers.

Advance tax payment on above basis will be in the interest of the taxpayers. The purpose of the above message was just to display the fact that the department has data with them and taxpayers must pay tax on the basis of above information and their actual income considering these transactions.

 

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