Insights on the Income Tax e-Verification Scheme 2021: Key Procedures and Compliance Strategies

The Income Tax e-Verification Scheme 2021 introduces a structured mechanism for the verification of reported financial transactions. This note provides a comprehensive guide to understanding, navigating, and complying with the scheme, ensuring accurate and timely responses to any discrepancies or notices.

1. Accessing Reported Transactions

Procedure:

1. Login: Access the Income Tax e-portal and log in using your credentials.
2. Navigate to AIS: Go to “Services” > “Annual Information Statement (AIS)”.
3. Select Financial Year: Choose the relevant financial year to view the detailed statement.

Key Points:

• The Annual Information Statement (AIS) includes various financial transactions such as TDS/TCS receipts, bank deposits, and investments.
• Ensure all reported transactions are reviewed for accuracy to avoid discrepancies.

2. Reporting Incorrect Transactions

Procedure:

1. Access Feedback Section: On the AIS portal, locate the incorrect transaction.
2. Submit Feedback: Click on the Feedback button and report the discrepancy with relevant details.

Key Points:

• Report any incorrect transactions promptly to ensure accurate records.
• Providing detailed and accurate feedback will aid in the correction process.

3. Follow-Up After Raising an Objection

Procedure:

1. ITD Review: The Income Tax Department (ITD) will review the objection and contact the Source/Reporting Entity.
2. Correction: If the Source confirms the discrepancy, the AIS will be updated.
3. Notice Issuance: If the issue is not resolved, a notice under Section 133(6) will be issued to the taxpayer.

Key Points:

• Track the Source’s response and ensure timely updates to avoid complications.
• Keep documentation of all communications for reference.

4. Understanding the e-Verification Scheme 2021

Key Elements:

Aspect	Description
Identification	Identifies mismatched transactions reported by the Source.
Confirmation Request	Requests confirmation of the transaction from the Source.
Notice Under Section 133(6)	Issued if the Source confirms the transaction.
Response	Provide explanations or evidence through the Compliance Portal.

Key Points:

• The Scheme facilitates verification of discrepancies and ensures accurate financial reporting.
• Respond to notices promptly to avoid further complications.

5. Filing Response to Notices

Procedure:

1. Login: Access the e-Filing Portal at eportal.incometax.gov.in.
2. Navigate to Compliance Portal: Go to “Pending Actions” > “Compliance Portal” > “e-Verification”.
3. Download Notice: Locate the applicable Financial Year notice using ‘DIN’ and download it.
4. Submit Response: Use the “Submit” link to provide your response, remarks, and supporting documents.

Key Points:

• Ensure pop-ups are enabled for viewing notices properly.
• Submit responses electronically; physical submissions are not accepted.

6. Handling Issues and Verification

Common Issues and Solutions:

Issue	Solution
Blank Screen	Enable pop-ups in browser settings.
Notice Not Visible	Check email and mobile for updates.
Access Issues	Contact Helpdesk at 18001034215.
Verification of Notice	Verify DIN through the e-portal for authenticity.

Key Points:

• Verify all notices received and maintain a record of communications.
• Contact the Helpdesk for resolution of access issues.

7. Responding to Notices

Procedure:

1. Handling Large Documents: Split documents into parts of less than 10 MB each if necessary.
2. Satisfactory Explanation: Await confirmation if no further clarification is needed.
3. Unsatisfactory Explanation: If the response is not satisfactory, you will need to update your return under Section 139(8A).
4. Missed Transaction: Update your ITR under Section 139(8A) and pay any additional tax due.
5. Updated Return: Clearly state the update in your response.
6. Penalty: A penalty of 25% applies if the update is made within the first year; 50% if within the second year.

Key Points:

• Provide clear explanations and keep track of all updates.
• Ensure compliance with penalties and update returns as required.

8. e-Verification Scheme vs. Scrutiny Assessments

Comparison:

Aspect	e-Verification Scheme	Scrutiny Assessments
Purpose	Preliminary verification of reported transactions.	Detailed examination of financial records.
Process	Confirmation from Source/Reporting Entity.	Comprehensive assessment by tax authorities.
Outcome	Allows for updates to your return.	May lead to assessments or reassessments.

Key Points:

• The e-Verification Scheme is a preliminary step; scrutiny assessments involve a more detailed review.