Business

Tax info mismatch: a new portal can help find & fix it

The Income Tax Department has identified certain mismatches between information furnished by third-party entities and income tax return (ITR) filed by taxpayers. It is important to fix these mismatches as tax experts say that if an individual is unable to explain the reason behind the mismatch, they may get an income tax notice.

To help individuals find the mismatch and then take action, a new on-screen online functionality has been made available on the income tax portal at https://eportal.incometax.gov.in by the Central Board of Direct Taxes (CBDT). The name of this web portal is ‘Compliance portal‘ and the scheme is being called ‘E-Verification Scheme 2021‘.

“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,” said the Income-tax department in a press release dated March 4, 2024.

Tax experts say that there could be many factors for this mismatch error to occur. “In certain instances, we have seen that taxpayers had inadvertently accepted the details in the Annual Information Statement (AIS) twice via the feedback tab. This unintentional action has resulted in the system erroneously double counting the same income in the taxpayer’s records, leading to subsequent discrepancies,” says Neeraj Agarwala, Partner, Nangia Andersen India, a tax and business advisory firm.

In an earlier press release dated February 26, 2024 the income-tax department said,“At present, the information mismatches relating to Financial Years 2021-22 and 2022-23 have been displayed on the Compliance portal.” Now the same thing is being extended for FY 2020-21, as per the press release dated March 4, 2024.

Also read: How much income tax deduction is available on bank FD, RD and savings account interest.

Only in these cases the interest mismatch issue would be resolved automatically

If an individual has any interest income to report under the head income from other sources, then schedule OS needs to be filled while filing the ITR. “In case the taxpayer has disclosed the interest income in the ITR under the line item ‘Others’ in the Schedule OS, she/he need not respond to the mismatch pertaining to the interest income. The said mismatch shall be resolved on its own and will be reflected in the portal as ‘Completed’,” said the income tax department in a press release dated February 26, 2024.

Tax experts say that the reason for this error occurring is that in certain specified cases the computer system used by the income tax department has erred in comparing the interest amount as reported by banks and others.

Chintan Ghelani, Associate Partner, Direct Taxes, N.A. Shah Associates, a CA firm explains that the root cause of such mismatches is that a taxpayer receives interest income from the bank as well as other entities, however, the ITR processing system compares this income only with the income received from the banks. “This error is observed by CBDT and therefore clarification as mentioned above is issued,” says Ghelani.

Also read: 11 ways of tax savings for salaried individuals for FY 2023-24.

Here’s how the compliance portal can help you

Tax experts say that the ‘E-verification Scheme’ will help in increasing tax compliance and identifying unreported or under-reported financial transactions by individuals.

“This scheme gives information to taxpayers about mismatches identified while processing ITRs by comparing income offered by taxpayers with corresponding amounts reported by third parties,” says Ghelani.

Ghelani further summarises what benefits individuals can take using this scheme:

  • This scheme provides an opportunity for individuals to update their income which they might have missed or not reported correctly while filing their ITR,
  • This scheme may help taxpayers to explain certain financial transactions with evidence,
  • The individual gets the chance to explain a transaction being verified before any further action by way of assessment or reassessment.

Here’s how the compliance portal works

There are two ways to access the compliance portal. The first way is through the dedicated web link (https://eportal.incometax.gov.in) and the second way is through logging into the income tax return (ITR) portal. The details of the mismatch would be available under the e-Verification’ tab after logging into the ITR portal. “Taxpayers who are not registered on the e-filing website have to register themselves on the e-filing website to view the mismatch,” said the Income-tax department in the press release dated February 26, 2024.

Here’s a step-by-step guide
Step 1: Go here: https://eportal.incometax.gov.in or here: https://www.incometax.gov.in/iec/foportal/ and login using your credentials.

Step 2: Once logged in navigate to the ‘Pending Actions’ tab and hover your mouse over it. You will see a button called ‘Compliance Portal’, click on it.

Step 2

Source: https://ais.insight.gov.in/complianceportal/everification

Step 3: You would be navigated to a new website (https://ais.insight.gov.in/complianceportal/everification) and here click a tab called ‘Verification’.

Compliance portal

Source: https://ais.insight.gov.in/complianceportal/everification

Once the ‘Verification’ tab is clicked details of all the mismatches identified by the Income-tax department would be displayed.

Compliance portal

Source: https://ais.insight.gov.in/complianceportal/everification

What if you are unable to explain the mismatch?

The income tax department has said that those individuals who could not explain the mismatch could try to file ITR-U. “The taxpayers who are unable to explain the mismatch may consider the option of furnishing an Updated Income Tax Return if eligible, to make good any under reporting of income,” said the Income-tax department in the press release dated February 26, 2024.

The tax department has said that the ‘E-Verification Scheme 2021’ is applicable for FY 2021-22 and FY 2022-23 so there is still time to file ITR-U, if required. The deadline for filing an ITR-U is 24 months from the end of the respective assessment year. Consequently, the deadline for FY 2021-22 is March 31, 2025, and for FY 2022-23, it is March 31, 2026. Last date for filing of ITR-U for F.Y. 2020-21 is March 31, 2024.

“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,” said the Income tax department in the press release dated March 4, 2024.

If you do not make use of this time to file ITR-U and could not explain the mismatch, you may get an income tax notice.

“It’s important to note that updated returns should solely reflect additional income and must not enhance tax losses or decrease tax liabilities. Taxpayers are afforded specified time to submit their ITR-U, which is within the due date, in the communication itself. Failure to do so, if a mismatch is confirmed by the department, may prompt an income tax notice for further scrutiny,” says Agarwala.

Related Articles

Back to top button