With advancement in technology, thefts and concealments have also taken an advanced form. One of its branches is related to tax evasion when a taxpayer sometimes deliberately while sometimes unknowingly due to lack of knowledge on legal provisions opt for tax evasion rather than tax avoidance. Hence, the need for creating awareness amongst taxpayers on this topic is felt more than ever.
Tax avoidance is the use of legal approach to avoid paying higher taxes or any tax at all. On the other hand, tax evasion means deliberate misrepresentation of income in Income Tax Return so that lower taxes are automatically imposed. While in the former way, taxpayers can make use of various Sections of law itself such as Sec. 80C, 80CC, 80D, 80G to represent lower income tax slab, in the latter way, they do not opt for any such ways, rather do not show some kind of income at all. It is also seen that many taxpayers opt for showing wrong deductions (for which expenditure is not actually incurred) just to evade tax.
Hence, to counter this issue, Income Tax Department has recently came up with E-Verification Scheme, 2021. Because Income Tax Department has identified certain mismatches between third party information on interest and dividend income, and the Income Tax Return (ITR) filed by taxpayers, they have launched this scheme to verify the amount of such income.
The Department might have asked PAN based information on interest income from banks, post offices, micro finance companies and NBFCs and information on dividend income from stock brokers, Depositories and Depository Participants. Artificial Intelligence may have been used for comparing the information so furnished in the Return and that given by such Authorities and wherever any mismatches are found, they are highlighted and being informed to the taxpayers through email and sms functionality.
Currently, these incomes for Financial Years 2021-22 and 2022-23 are only being analyzed. Taxpayers can check the query through Compliance Portal and may furnish their response to reconcile the mismatch. If need be, they have to file the updated return u/s 139(8A).
This is a very big move by the Department which is much needed at this stage. It is pertinent to note here that those who have yet not registered themselves on Income Tax Portal will have to get them registered to check the query.
This will in turn also ensure more and more registration on the website.
To conclude, it can be said that Finance Ministry has been aggressively moving in both directions that is at one place, giving opportunity to taxpayers to correct mistakes and at the same time, also ensuring correct filing of return and punishing the regular wrong doers.
