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Introduction to the e-Verification Scheme 2021

In an era where transparency and accountability in financial transactions are paramount, the Income Tax Department of India has taken a significant step forward with the introduction of the e-Verification Scheme 2021. The scheme is a cornerstone in promoting voluntary compliance among taxpayers by leveraging technology to ensure accuracy and integrity in tax filings.

Background and Importance

The Income Tax Department regularly receives detailed information about taxpayers’ financial transactions from various sources. This information is meticulously compiled and reflected in the Annual Information Statement (AIS) module, accessible to taxpayers for review. However, discrepancies often arise between the information reported by taxpayers in their Income Tax Returns (ITRs) and the data available with the Department, particularly for the Assessment Year (A.Y.) 2021-22, corresponding to the Financial Year (F.Y.) 2020-21.

Recognizing the need to address these mismatches and to encourage taxpayers to rectify discrepancies voluntarily, the e-Verification Scheme 2021 was introduced. This initiative not only aims to enhance transparency but also facilitates a more straightforward and efficient process for taxpayers to verify and update their tax filings.

The e-Verification Process

The e-Verification Scheme 2021 operates through a structured process where the Income Tax Department sends communications to taxpayers about any mismatches observed in their filed ITRs compared to the financial transactions data available. These communications are dispatched directly to the taxpayers’ registered email accounts, urging them to review their Annual Information Statement (AIS) via the e-filing portal.

Taxpayers are then encouraged to file updated ITRs (ITR-U) if they identify any discrepancies or if the Department highlights mismatches. This process is not only for those who have filed their returns but also extends to eligible non-filers who, based on the information available with the Department, may need to submit updated returns under section 139(8A) of the Income-tax Act, 1961.

Deadline for Compliance

The deadline for filing updated returns (ITR-U) for A.Y. 2021-22 (F.Y. 2020-21) is set for 31st March 2024. This gives taxpayers ample time to review their AIS, identify any mismatches, and take the necessary steps to ensure their tax filings are accurate and complete.

Benefits of the e-Verification Scheme 2021

The e-Verification Scheme 2021 offers multiple benefits to taxpayers and the tax administration alike. For taxpayers, it simplifies the process of identifying and correcting discrepancies in tax filings, thus reducing the likelihood of future disputes or penalties. It also provides a clear and straightforward pathway for voluntary compliance, fostering a culture of transparency and trust between taxpayers and the tax authorities.

Last date to file ITR-U for A.Y. 2021-22 (F.Y. 2020-21) is 31.03.2024

From the administration’s perspective, the scheme enhances the efficiency and effectiveness of tax collection processes. By encouraging voluntary compliance, the Department can reduce the time and resources spent on audits and investigations, focusing instead on more critical areas of tax administration.

How to Participate in the e-Verification Scheme

Participating in the e-Verification Scheme 2021 is straightforward. Taxpayers should first log into their account on the e-filing portal and review their Annual Information Statement (AIS) for any discrepancies. If mismatches are identified or if a communication has been received from the Department, taxpayers should prepare and file an updated ITR (ITR-U), addressing the discrepancies.

It is crucial for taxpayers to ensure that their contact information, especially their email addresses, is up-to-date in the Income Tax Department’s records. This ensures that any communication from the Department regarding the e-Verification Scheme or other important matters is received without delay.

Conclusion

The e-Verification Scheme 2021 marks a significant step towards enhancing voluntary tax compliance in India. By leveraging technology to bridge the gap between the information available to the Income Tax Department and the data reported by taxpayers, the scheme paves the way for a more transparent, efficient, and compliant tax environment. With the deadline for filing updated returns fast approaching, taxpayers are urged to review their AIS, identify any discrepancies, and take the necessary steps to ensure their tax affairs are in order, thereby contributing to the nation’s economic well-being.

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Ministry of Finance

Promoting Voluntary Compliance through e-Verification Scheme-2021

Last date for filing of updated returns (ITR-U) for A.Y. 2021-22 (i.e. for F.Y. 2020-21) is 31.03.2024

Dated: 04 MAR 2024

The Income Tax Department receives information of specified financial transactions of taxpayers from various sources. To increase transparency and to promote voluntary tax compliance, this information is reflected in the Annual Information Statement (AIS) module and is available to the taxpayer for viewing.

In some cases of Income Tax Returns (ITRs) filed for A.Y. 2021-22 (F.Y. 2020-21), a ‘mismatch’ has been identified, between the information filed in the ITR vis-à-vis information of specified financial transactions, as available with the Department. In cases where ITRs for A.Y. 2021-22 have not been filed and, the Department is in possession of information of specified high value financial transactions, the same also needs to be examined.

Accordingly, as part of the e-Verification Scheme-2021, the Department is in the process of sending communication(s) to the taxpayers for the mismatch in information pertaining to A.Y. 2021-22 (F.Y. 2020-21). This information is being communicated to the taxpayers through their e-mail accounts as registered with the Income Tax Department. Vide the said communication, the Department is urging taxpayers, to view their AIS through the e-filing portal and file updated ITRs (ITR-U), wherever found necessary by the taxpayer. Eligible non-filers can also submit updated returns (ITR-U) u/s 139(8A) of the Income-tax Act, 1961.

Last date for filing of updated returns (ITR-U) for A.Y. 2021-22 (i.e. for F.Y. 2020-21) is 31.03.2024.

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