Ministry of Finance: Promoting Voluntary Compliance through e-Verification Scheme-2021

Key Points and Concepts:

• The Income Tax Department utilizes information from various sources to enhance transparency and encourage voluntary tax compliance.
• An Annual Information Statement (AIS) module is used to display taxpayer-specific financial transaction information.
• 'Mismatch' issues between filed Income Tax Returns (ITRs) and specified financial transaction data have been identified for A.Y. 2021-22 (F.Y. 2020-21).
• The e-Verification Scheme-2021 involves sending communications to taxpayers regarding mismatches and the need to file updated ITRs (ITR-U) by 31.03.2024.
• Non-filers can also submit updated returns under section 139(8A) of the Income-tax Act, 1961.

Important Dates and Terminologies:

• Last date for filing updated returns (ITR-U) for A.Y. 2021-22: 31.03.2024
• Income-tax Act, 1961: Legislation governing income tax regulations in India

Strategies and Methodologies:

Voluntary Compliance:

• Encouraging taxpayers to proactively review and update their financial information.
• Utilizing e-Verification to streamline the verification process and enhance compliance.

Exam Questions:

• What is the purpose of the e-Verification Scheme-2021 introduced by the Ministry of Finance?
• Explain the significance of the Annual Information Statement (AIS) module in promoting voluntary tax compliance.
• Discuss the implications of 'mismatch' issues between filed Income Tax Returns and specified financial transaction data for taxpayers.

Theme: Promoting transparent and voluntary tax compliance through technology-driven verification schemes.

Summary:

The Ministry of Finance is emphasizing voluntary compliance through the e-Verification Scheme-2021, addressing 'mismatch' issues in filed Income Tax Returns and specified financial transaction data. Taxpayers are urged to review their information and file updated returns by 31.03.2024 to enhance transparency and compliance.