The Income Tax Department under the Central Board of Direct Taxes (CBDT) has conducted the verification of the reporting entities. The Income-Tax Department proactively encourages taxpayers’ voluntary compliance. The department gets data on financial transactions from Reporting Entities like banks, forex dealers, sub-registrars, and others to help achieve this purpose.
The reporting entities include banks, financial institutions, companies, and other organizations that are required by law to provide information about specified financial transactions of taxpayers to the income tax department.
The Annual Information Statement (AIS), which contains this information, is then made accessible to taxpayers via their e-filing accounts. The AIS is a useful tool for taxpayers since it gives them the pertinent information they need to assure the accuracy of their Income Tax Return filing.
Although the majority of Reporting Entities willingly adhere to the legal obligations of submitting accurate and comprehensive Statements of Specified Financial Transactions (SFTs), certain instances of non-compliance have been identified by the department.
According to the press release from the department dated June 30, 2023, the department recently verified a renowned bank with headquarters in Tamil Nadu to address difficulties with reporting entity compliance. There were a number of irregularities discovered during the vetting process. It was discovered that the bank had not submitted SFTs in some instances and had not provided accurate or complete information in others.
Furthermore, there were instances where SFTs were not filed for cash deposits exceeding Rs. 2,700 crore across more than 10,000 accounts, credit card transactions exceeding Rs. 110 crore, dividend distributions surpassing Rs. 200 crore, and share issuances surpassing Rs. 600 crore.
The department also found that the SFTs that the Bank filed were lacking in a number of areas. Significant transactions, such as interest payments surpassing Rs. 500 crore, time deposits, cash deposits and withdrawals from current accounts, etc., were not reported by the Bank.
The verification also revealed defective filing of Form 61B for Automatic Exchange of Information (AEOI) about account holders “resident” in other countries.
Likewise, the Department additionally examined two cooperative banks in Uttarakhand and discovered transactions worth over a few thousand crore that the banks had not disclosed.
Thus, the board aimed to explain the legal obligations and processes, as well as to address difficulties faced by the Reporting Entities, outreach programmes are being regularly organised by the Department across the country. This is another initiative of the Department to facilitate ease of compliance.
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