The Income Tax Department has carried out its data analysis to identify and monitor persons who are non filers of Income Tax return and have entered into high value transactions using “Non-Filers Monitoring System”. The said analysis was carried out to identify non filers of tax returns about whom specific information was available in the database of Income Tax Department database.
NMS (Non-filers Monitoring system) is a software based data analysis system, which has been developed by Central Board of Direct taxes (CBDT), to provide report of persons who have carried on high value transactions in a particular financial year and also have potential tax liability but still not have file their Income tax returns. The non filers persons can be an Individual, HUF, Company, Partnership Firms, LLP, OPC, Trust, society etc. As we all should be aware that, all the high value transactions are closely tracked by Income Tax Department. In fact the banks and all other financial institutions are mandatorily required to report the high value transactions to the Income tax department in prescribed format of its reporting return.
As per Rule 114B of Income tax Rules,1962 – Every person is required to mention his PAN in all relevant documents relating to following transactions –
- Sale or Purchase of a Motor Vehicle like Car, Bus, Bike etc
- Sale or Purchase of any Immovable property having sale consideration for more than Rs. 10 Lacs, like land, building,Flat etc
- Sale or Purchase of Unlisted equity shares if amount exceeds Rs. 1 Lakh per transactions.
- Cash deposit in bank or post office exceeding Rs. 50,000 during one day.
- Purchase of Foreign currency exceeding Rs. 50,000 at any one time.
- Payment in connection with travel to a Foreign country.
- Cash deposit in Bank or post office exceeding Rs. 10 Lakhs during a particular financial Year.
- Term Deposit (FD) in bank or post office exceeding Rs. 10 Lakhs.
- Credit Card payment exceeding Rs. 2 Lakhs during a financial year.
- Receipt of cash payment aggregating Rs. 2 lakhs from a single person during financial year. Etc..
The Taxman analyse its data on the basis of available database which comes from the following sources of information –
- Statement of Financial Transactions (SFT)
- Annual Information Returns (AIR)
- Tax Deduction at Source (TDS) Return filed by the dedicator
- Tax Collected at Source (TCS) Return filed by the collector
- Information about outward Foreign Remittances
- Information about inward Foreign Remittances
- Exports and imports data, etc..
Using NMS, IT department has identified several potential Non-Filers who have carried out high value transactions during the finial year 2017-18 but have still not filed his Income Tax Return for assessment Year 2018-19 (Pertaining to financial year 2017-18). It department has initiated to send notices to all the Non-Filers of Income Tax Return identified.
To respond these notices, assessed is no more required to visit Income Tax Department office physically, as the entire process is completely online. The Department has enabled e-verification of these NMS cases to reduce the compliance cost for taxpayers by soliciting their response online.
It is reiterated that there is no need to visit any Income Tax office for submitting response, as the entire process is to be completed online. Taxpayers can access information related to their case from the ‘Compliance portal’ which is accessible through the e-filing Portal of the Department at ITD Portal. The PAN holder should submit the response electronically on the Compliance Portal and keep a printout of the submitted response for record purposes. User Guide and FAQs are provided under the “Resources” Menu on Compliance Portal.
Non-filers are requested to assess their tax liability for AY 2018-19 and file the Income Tax Returns (ITR) or submit online response within 21 days. If the explanation offered is found to be satisfactory, matters will be closed online. However, in cases where no return is filed or no response is received, initiation of proceedings under the Income-tax Act, 1961 will be considered. (Article data compiled from the information available at various Government Websites like PIB,ITD etc)