In recent days, taxpayers have expressed concerns regarding advisory messages received from the Income Tax (I-T) department, creating a buzz on social media platforms. These messages, related to mismatches between disclosures in taxpayers’ income tax returns (ITRs) and information obtained from reporting entities, have prompted questions and uncertainty among taxpayers. It’s crucial to address this situation and provide clarity on the recommended course of action.

The income tax department clarified that these advisory messages are communication and not formal notices. The intention behind such communication is to inform taxpayers about the information available with the ITD (Income Tax Department) concerning transactions reported by reporting entities during the year. The primary objective is to facilitate taxpayers by making them aware of potential mismatches and offering them an opportunity to provide feedback through the compliance portal of ITD.

The department’s statement emphasized that the advisory messages are not sent to all taxpayers but specifically to cases where there is an apparent mismatch between ITR disclosures and information received from reporting entities. Taxpayers are encouraged to respond promptly and use the compliance portal to provide feedback or, if necessary, revise their already filed returns or file a belated return if not done so far. The deadline for revising or filing belated returns for Assessment Year 2023-24 is December 31, 2023.

To clarify, reporting entities such as banks, NBFCs, brokers, and mutual funds submit data about high-value transactions, known as the Statement of Financial Transactions (SFT). This data is then cross-verified with the information available in taxpayers’ ITRs. If discrepancies are identified or if a taxpayer has missed the deadline for filing their ITR, the last date to file or amend the ITRs is December 31.

Taxpayers receiving these cautionary messages are advised to take the following steps:

Provide Necessary Feedback: If taxpayers have received an advisory message, it is essential to use the compliance portal to provide the necessary feedback. This portal serves as a platform for taxpayers to respond to the communication and explain any disparities.

File Belated Return by December 31, 2023: For those who haven’t filed their returns yet, filing a belated return by the specified deadline is crucial. This ensures compliance with tax regulations and avoids potential penalties.

Tax experts, including Kamal Murarka, a Chartered Accountant and tax expert, emphasize that these advisory messages are not formal notices but rather cautionary communications. Taxpayers should consider either amending their returns before December 31 or providing a detailed explanation to the tax department.

In conclusion, the key takeaway is for affected taxpayers to act promptly, utilize the compliance portal for feedback, and ensure compliance with the specified deadlines to address any mismatches or filing gaps in their ITRs. This proactive approach aligns with the department’s objective of facilitating a smooth process for taxpayers to rectify discrepancies and fulfill their tax obligations.