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Income Tax High-Value Transactions: Submit Response Under e-Campaign in Compliance Portal

Updated on: 18 Apr, 2024 03:55 PM

Paying income tax is a legal obligation that applies to all taxpayers, whether individuals or businesses. The income tax department uses various analytical techniques to track the non-filers of Income Tax Return (ITR) or individuals who underreport their income (like miss reporting high-value transactions). Also, to track this, the IT department contacts banks and various government departments to obtain information about individuals who spend high amounts but are non-filers of ITR or underreport their income.

To ensure compliance with these regulations, the government has established a compliance portal enabling taxpayers to submit their responses to high-value transactions in income tax. If you are also confused about how to respond to high-value transactions, read this guide.

What are High-Value Transactions?

High-value transactions involve large sums of money and are reported to tax authorities by banks and other institutions when they surpass predefined thresholds, ensuring transparency and regulatory compliance within the financial system.

Here are some examples of Income Tax high-value transactions:

Below is a list of transactions that are reported to the Income Tax Department by various agencies such as banks, government agencies, mutual fund houses, and companies by filing Form 61A, also known as Statement of Financial Transactions (SFT).

As per Income Tax department, following will be considered as high-value transactions if they exceed the following limits:

  • Exceeding Rs. 10 lakh in cash deposits or withdrawals from a savings bank account in a fiscal year.
  • Exceeding Rs. 50 lakh in cash deposits or withdrawals from a current account in a fiscal year.
  • Over 10 lakh in cash is deposited into a fixed deposit account in a fiscal year.
  • Sales or purchases of the immovable property exceeds 30 lakh rupees in a financial year.
  • Investments in cash worth more than 10 lakh rupees in a financial year in stocks, mutual funds, debentures, and bonds.
  • Exceeding Rs. 1 lakh in cash payments for credit card bills in a fiscal year.
  • Exceeding 10 lakh in a fiscal year in payments made for credit card debt using any method other than cash.
  • Sale of foreign currency of more than 10 lakh rupees in a fiscal year.
  • Domestic business-class air travel, the payment of tuition or donations, and the purchase of jewelry, white goods, paintings, marble, and electricity consumption exceeding Rs. 1 lakh in a fiscal year are a few examples of high-value transactions for the Income Tax Department may send you the notice.

How does the Income tax department trace high-value transactions?

Have you ever wondered how the tax department keeps track of your high-value transactions? Well, they have access to your financial data they collect from different govt. Agencies and banks. Here are a few ways they can monitor your transactions and detect any tax evasion or avoidance.

  • The tax department requires banks and other financial institutions to submit an Annual Information Return (AIR) every year that contains details about transactions that exceed a permissible threshold. For instance, if you deposit more than Rs. 10 lakh in cash in a single calendar year, invest more than Rs. 2 lakh in mutual funds, or spend more than Rs. 30 lakh on real estate, the AIR will be updated.
  • Statement of Financial Transactions (SFT) Compared to the previous report, it includes a wider range of transactions, such as credit card payments, foreign exchange transactions, stock and bond purchases, insurance policy purchases, and gold and silver purchases. Different reporting thresholds depend on the transaction type, but transactions between 50,000 and 10 Lakh come under these thresholds.
  • Tax Deducted at Source (TDS): When the payer withholds a portion of the tax from the payment made to the payee and deposits it with the income tax department on the payee's behalf. For instance, if a company credits your salary, it will deduct tax from it and pay it to the tax authority. Your Form 26AS, a summary of all your tax credits, includes information about the TDS.
  • Like TDS, Tax Collected at Source (TCS) is when sellers of goods or services collect tax from the customers and deposit it with the income tax department. For instance, if you purchase a car that costs more than 10 lakh, the seller will charge you 1% tax and submit it to the tax department. Your Form 26AS also includes the TCS information.
  • You must file an income tax return (ITR) each year to report your income, deductions, paid taxes, and claimed refunds. The tax department can verify your sources of income and spending habits by comparing the data on your ITR with the data they have from AIR, SFT, TDS, and TCS.

How To Comply With e-Campaign Notice Online and How to submit Response?

Are you a taxpayer looking for a hassle-free way to submit responses related to high-value transactions to the Income Tax Department? Look no further than the Income Tax Compliance portal! This user-friendly platform is designed to make your life easier by allowing you to submit your responses online without ever having to step foot in the Income Tax Department's office. But how exactly do you use the portal to submit your responses? Here's a step-by-step guide:

Step 1: Income Tax Compliance Portal Login

Taxpayers can log in to the Income Tax Compliance portal using their PAN number and password. If the taxpayer does not have a password, they can generate it by clicking on the 'forgot password' option.

Income Tax Compliance portal

Step 2: View the High-Value Transaction

After logging in, taxpayers can view the high-value transaction reported by the Income Tax Department by clicking on Pending actions, then on the Compliance portal, and then on E Campaign.

transaction reported

Step 3: Select the relevant e-campaign

After reaching the landing page of the e-campaign portal, you can select the relevant e-campaign and click on ‘Provide feedback in AIS.’ If you don’t have active e-campaigns or e-verifications, you will get the message – “No Compliance Record has been generated for you.”

relevant e-campaign

Step 4: Select information Category

An “E” mark can be seen against the information category for which you have received the communication. E means expected.

Step 5: Submit the Response

From the options, select the most appropriate response:

  • Information is correct
  • Information is not fully correct
  • Income is not taxable
  • Information relates to other PAN/year
  • Information is duplicate/included in other displayed information
  • Information is denied

The response will be sent to the Income Tax Department for further processing.

Have you also received an Income Tax notice or an email/sms from ITD and don’t know what to do or how to respond? Consult the best tax experts in town and get strategically tailored guidance as per your specific needs. Contact our Tax Advisory Service.

Preliminary Response

If you receive an Income Tax e-Campaign notice, there will be a "Preliminary Response" section where you need to answer questions. These questions depend on the campaign type, like whether you filed an ITR or made certain high-value transactions.

For example, if the campaign is about non-filing of ITRs:

  • Click "Provide Response" in the "Preliminary Response" section.
  • Choose your answer via the drop-down menu.
  • Provide additional details depending on your answer:
  • Filed ITR: Enter the acknowledgment number, date, filing mode (e-filed or paper), circle/ward/city, and optional remarks.
  • Didn't file ITR: Select the reason and add any comments.
  • Submit your response after completing all information. You can download it later from the "Activity History" tab.

Note: You won't see this section if you don't have any active e-campaigns or e-verifications.

Submit Feedback On Information In AIS

Please provide feedback on the information within the e-campaign where no feedback has been previously given. Specifically, focus on the L1 information, which is designated as 'Expected,' as indicated in the attached screenshot.

For guidance on providing feedback, refer to the link: Submit feedback on information in AIS.

This process enables you to submit a response to the income tax department regarding the notice on high-value transactions or non-filing of the income tax return.

Why is it important to submit responses in the compliance portal?

The Income Tax Department monitors high-value transactions to prevent tax evasion and black money generation. Taxpayers need to comply with income tax on high-value transactions to avoid any legal consequences. The Income Tax Compliance portal is a user-friendly platform that allows taxpayers to submit their responses online without the need to visit the Income Tax Department's office. By following the step-by-step guide mentioned above, taxpayers can submit their responses in the compliance portal hassle-free and timely. It is important to note that submitting responses in the Income Tax Compliance portal is a legal obligation and a responsible citizenship duty.

Taxpayers contribute to the country's economic growth and development by complying with high-value transactions in income tax.

Therefore, taxpayers must keep track of their financial transactions and submit responses in the compliance portal as and when required. If you find responding to notices complicated, you can talk to our experts, who can guide you through the process and make sure that you file the correct response.

On the Income Tax Compliance Portal, you can also view your Annual Information Statement, e-Campaigns, e-Proceedings, and DIN Authentication.

What to Do If Form 26AS Shows SFT Transactions

Here's what you should do if you see SFT (Specified Financial Transactions) reflected in your Form 26AS:

  • Step 1: Verify the information:
    Match the details: Carefully compare the transactions mentioned in Form 26AS with your records. Ensure the type of transaction, amount, and date match your recollection.
    Identify errors: If there are any discrepancies, like an unknown transaction or incorrect amount, investigate the source. Contact the relevant institution (bank, broker, etc.) to clarify the issue.
  • Step 2: Reporting and taxes:
    Include in ITR: Ensure you report all the SFT transactions reflected in Form 26AS while filing your Income Tax Return (ITR). Choose the appropriate schedule based on the transaction type (e.g., Schedule D for capital gains).
    Tax liability: Calculate the tax liability accurately for each transaction based on applicable tax rates and deductions.
  • Step 3: Potential discrepancies:
    Missing transactions: If any legitimate SFT transactions are missing from Form 26AS, you need to disclose them in your ITR and explain the reason for non-reporting in the specified column.
    Overlooked income: Ensure all income generated from these transactions is reported, even if it's exempt from tax. Failing to do so might lead to scrutiny from the Income Tax Department.

Who can Receive Email/SMS From the Income Tax Department?

Under the e-campaign initiative, the Income Tax department communicates via emails or SMS to specific taxpayers to validate their financial transactions, sourced from diverse channels like SFT, TDS, TCS, and other avenues. Information encompassing GST, imports/exports, and dealings in securities, derivatives, commodities, and mutual funds can be gathered from third-party sources.

If the income tax department identifies that certain information related to your high-value transaction, which does not appear to be in line with the income tax return filed by you for AY 2023-24, you can receive an email or sms.

You might receive an email/SMS from the e-campaign if:

  • Non-filing of Income Tax Return
  • Discrepancies/deficiencies in your Income Tax Returns

If you have also received an email/SMS from the income tax department for high-value transactions, you can consult our tax experts using our Tax Advisory Service to get accurate guidance on how to respond to such notices.

Frequently Asked Questions

Q- What are high-value transactions?

High-value transactions are financial transactions that exceed a certain threshold amount set by the regulatory authority. These transactions are often targeted by money launderers and terrorist financiers, which is why compliance with high-value transaction regulations is crucial.

Q- Why do I need to submit a response in the compliance portal for high-value transactions?

Regulatory authorities require businesses and individuals to submit responses in the compliance portal for high-value transactions to prevent evasion of taxes and ensure compliance with relevant laws and regulations.

Q- How do I access the compliance portal for high-value transactions?

You can access the compliance portal for high-value transactions by visiting the Income Tax Department website and following the instructions for accessing the portal.

Q- How to respond to Income Tax notice for high-value transaction?

  • Step 1: Log in to income tax e-filing portal.
  • Step 2: Go to ‘Pending Actions’> Compliance Portal > ‘e-Campaign (AY 2021-22 Onwards)’.
  • Step 3: Select the relevant e-campaign and the information category
  • Step 4: Select the transaction you want to report.
  • Step 5: Submit Response

Q- Are there any penalties for not reporting high-value transactions?

Neglecting to declare the source of funds can lead to significant consequences. Authorities may impose penalties, back taxes, and interest charges on any unreported income. In some cases, this behavior could trigger audits and further investigations into your financial activities. If discrepancies are found, it may also result in reputational damage and potentially severe legal action, including criminal charges in extreme cases. Always declare all sources of income to comply with tax regulations and avoid these serious repercussions.

Q- What information do I need to submit in the compliance portal for high-value transactions?

The specific information required for high-value transactions will depend on the regulatory authority and the specific transaction. However, you will likely need to provide information such as the transaction amount, the parties involved in the transaction, and the purpose of the transaction.

Q- What format should I use for submitting responses in the compliance portal for high-value transactions?

The compliance portal will typically provide specific instructions for the format and method of submission for responses. It may require you to upload documents or enter information into online forms.

Q- What happens if I don't submit a response in the compliance portal for high-value transactions?

Non-compliance with high-value transaction regulations can result in severe legal and financial consequences, such as fines, penalties, and reputational damage. It is important to comply with the regulations and submit responses as required.

Q- How can I ensure that my response is accurate and complete?

Before submitting your response, carefully review the instructions and guidelines provided by the regulatory authority. Ensure you understand what is required of you, and double-check your response for accuracy and completeness before submitting it.

Q- How can I follow up on my response after submitting it to the compliance portal for high-value transactions?

You can follow up on your response by checking the status in the compliance portal or contacting the regulatory authority directly. Keeping records of your submissions and any correspondence with the regulatory authority is a good idea.

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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.