News

Published: July 11, 2023
Updated: July 11, 2023

Income Tax Department Implements Initiatives for Ease of Compliance, Urges Taxpayers to Verify Refunds

The Income Tax Department has introduced multiple initiatives to ensure ease of compliance for taxpayers and promote voluntary adherence to tax regulations. During a press conference on the issue of suspicious refunds, officials highlighted instances where taxpayers claimed high refunds, ranging from 75% to 90% of the Tax Deducted at Source (TDS) deducted by employers. The Principal Chief Commissioner of Income Tax for Andhra Pradesh and Telangana, Mita Madhusmita, addressed the conference and emphasized the department's commitment to simplifying processes and fostering trust in taxpayers.

Simplified Income Tax Return Form and Seamless E-Filing:

In an effort to streamline the tax filing process, the Income Tax Department has simplified the Income Tax Return form and made e-filing more seamless. Taxpayers are no longer required to upload proof of deductions or exemptions claimed while filing their returns, demonstrating the department's trust in taxpayers. Returns are processed promptly, and refunds are automatically credited to taxpayers' bank accounts. The department also monitors the accuracy of returns, ensuring the eligibility of deductions and exemptions claimed by taxpayers.

Incorrect Claims and Refunds:

The press release revealed that a significant number of salaried taxpayers in Andhra Pradesh and Telangana had made incorrect claims for deductions or exemptions, resulting in substantial refunds. Many of these taxpayers work in government departments, public sector units (PSUs), and prominent IT companies. It was also observed that individuals working for companies based outside the states held PAN cards registered in Andhra Pradesh and Telangana.

The Role of Intermediaries and Malpractices:

Field inquiries uncovered a trend where unsuspecting employees were persuaded by intermediaries or peers to make wrongful refund claims without understanding the consequences. Surveys conducted on consultants and intermediaries revealed incriminating evidence of such malpractices. Some individuals admitted to filing numerous returns with fraudulent deductions and exemptions, receiving significant refunds in return for commissions. Names of taxpayers associated with these malpractices were found in seized documents.

Consequences and Updated Returns:

Misreporting income and making false claims for deductions have severe consequences under the Income Tax Act, 1961. These consequences include interest at 12% per annum, a penalty of 200% of the taxes, and potential prosecution leading to imprisonment. However, taxpayers who have made such claims and received wrongful refunds can rectify the situation by filing Updated Returns under section 139(8A) for Assessment Years 2021-22, 2022-23, and by depositing the due taxes as per Section 140B. For Assessment Year 2023- 24, taxpayers can file Revised Returns under section 139(5) if the original return has already been filed.

Department's Appeal to Taxpayers:

Given the seriousness of the situation, the Income Tax Department urges all affected taxpayers in Andhra Pradesh and Telangana to reconsider their claims for deductions and exemptions in the returns filed for Assessment Years 2021-22, 2022-23, and 2023-24. Taxpayers are encouraged to promptly file Updated or Revised returns, as applicable, if their claims are unsubstantiated. By taking these steps, taxpayers can avoid the potential consequences associated with incorrect reporting and ensure compliance with tax regulations.

The Income Tax Department's initiatives aim to simplify compliance procedures and foster trust between taxpayers and the department. By encouraging voluntary compliance and addressing suspicious refund claims, the department strives to maintain the integrity of the tax system. Taxpayers in Andhra Pradesh and Telangana are urged to carefully review their claims for deductions and exemptions and take appropriate action to rectify any incorrect filings. Compliance with tax regulations benefits both taxpayers and the overall economy, ensuring a fair and transparent system for all.