Important keyword: AIR, Form 26AS, Income Tax Website, TRACES.
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How can taxpayers Track their High-Value Transactions?
You can check your Form 26AS to see if any of your transactions have been flagged as “High Value Transactions.” Banks and other financial institutions are required to report specific transaction details through Form 61A, known as the Annual Information Return. These measures are part of the government’s efforts to combat black money and monitor high-value transactions closely.
Under Section 285BA of The Income Tax Act, both individuals and businesses have their high-value transactions monitored to ensure compliance with tax regulations and to prevent tax evasion.
Steps to track High-Value Transactions
Log in to the Income Tax e-Filing Portal Visit the Income Tax e-Filing portal and login using valid credentials.
Click on “My accounts“ Select View Form 26AS (Tax credit) Option
View Tax Credit Statement Click on the option to proceed which will redirect you to the TRACES portal.
Agree usage and acceptance of form 16 Click on the checkbox and then proceed.
Option to view the form Now you can click on the option to view the annual information statement.
Enter the required details Enter the assessment year and choose the type of file you wish to download. The downloaded file will be password protected and the password is your Birth date.
Lastly, you can look at Part E It has the details of AIR Transaction in the downloaded file.
Important Keyword: Income Tax Compliance, Income Tax Website, IT Notice.
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What is Non-Filing Monitoring System (NMS)?
The Non-Filing Monitoring System (NMS) is a system developed by the Income Tax Department to identify individuals who are required to file taxes but have not done so. Here’s how it works:
Identification of Non-filing
The NMS identifies people who are liable to file taxes—those with an annual income exceeding ₹2,50,000—but have not filed their tax returns. The system leverages several information sources to spot these non-compliant taxpayers:
AIR (Annual Information Return): Filed by financial institutions, providing details of high-value financial transactions.
CIB (Centralised Information Branch): Collects and processes data related to potential tax evaders.
TDS Statements: Details of tax deducted at source, which help in tracking the income of individuals.
Notification Process
Once potential non-filers are identified, the NMS automatically sends a non-compliance email to the taxpayer’s registered email address. The Income Tax Department also sends notifications via SMS and email every year to inform non-filers of their obligation to submit their returns.
Sample email from Non-filers Monitoring System
How to respond to NMS compliance email?
Here is a step by step guide on how to deal with non-filers monitoring system email
Navigate to Compliance Click on View and Submit Compliance.
You will see the Submit Compliance Form. Navigate to Filing of Income Tax Return.
Navigate to Asssessment Year for which Return Not Received. You have two options to respond: A. ITR has been filed, B. ITR has not been filed.
If you select option (A), you need to provide: 1. Mode of filing the ITR, 2. Date of filing the ITR, 3. An acknowledgement Number.
If ITR was e-Filed, details will be prefilled automatically.
If you select option (B), you need to provide one of the following reasons: 1. Return under Preparation, 2. Business has been Closed, 3. No Taxable Income, 4. Others.
Navigate to Related Information Summary. It gives a detailed information summary.
Choose a relevant option under Information Related To against each transaction mentioned Provide additional information if required.
Following are the options available to a taxpayer under Information Relates To tab: 1. Self-Investment/ expenditure is out of exempt income 2. Self-Investment/ expenditure is out of accumulated savings 3. Self-Investment/ expenditure is out of gifts/ loans from others 4. Self-Investment/ expenditure is out of foreign income 5. Self-Income from a transaction is exempt 6. Income from a transaction is below taxable limit 7. Self-Income from transaction relate to different AY 8. Self-Not Known 9. Other PAN 10. Not Known 11. I need more information
Upon submission you will see following screen. Download Response.pdf for your future reference.
Important Keyword: PAN Aadhaar Link, Income Tax Account, Income Tax Website, Link Aadhaar PAN, PAN.
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PAN Aadhaar Link: Step-by-step Process
It’s imperative to link your PAN and valid Aadhaar number by June 30, 2023, as mandated by the government. Failure to do so will render your PAN “inoperative” starting from July 1, 2023, which entails certain consequences.
Latest Update
The deadline for PAN Aadhaar Link has seen several extensions, from March 31, 2022, to March 31, 2023, and now extended further to June 30, 2023. However, after this latest extension, taxpayers who fail to link their PAN and Aadhaar by July 1, 2023, will face consequences while their PAN remains inoperative:
No Refunds: No refunds will be issued against such PAN during this period.
No Interest on Refunds: Interest will not be payable on any refund due during this period.
Higher TDS/TCS Rates: TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) deductions will be at a higher rate, as specified in the Income Tax Act.
It’s important to note that this additional window for PAN Aadhaar Link comes with a nominal fee, the amount of which depends on the date on which the linking is completed.
Linking Completed
Applicable Fee
Before June 30, 2023
₹500
After July 1, 2023
₹1,000
What is PAN Aadhaar Link?
The PAN (Permanent Account Number) and Aadhaar are vital identification tools issued by the government, each serving distinct purposes. Linking these two unique identification numbers holds significance for both legal compliance and operational efficiency.
PAN:
PAN, a 10-digit alphanumeric code issued by the Income Tax Department, serves as a crucial tool for tax-related transactions and identity verification.
Aadhaar:
Aadhaar, a 12-digit unique number issued by the UIDAI, is aimed at providing universal identity acceptance across India, encompassing biometric and demographic information.
Benefits of PAN Aadhaar Link:
Comprehensive Activity Trail: Linking Aadhaar with PAN streamlines the tracking of all financial transactions, aiding the Income Tax Department in monitoring activities efficiently.
Easy E-Verification: Taxpayers can seamlessly e-verify their returns without digital signatures, enhancing the tax filing process.
Prevention of Duplicate PANs: By linking PAN with Aadhaar, the government can identify individuals with multiple PAN cards, facilitating streamlined governance.
Enhanced Fraud Prevention: The integration of PAN and Aadhaar enables better oversight of transactions, reducing the scope for fraudulent activities and tax evasion.
Exemptions from Mandatory Linking:
Certain categories of individuals, such as residents of specific states, non-resident Indians (NRIs), and individuals above the age of 80, are exempt from the mandatory linking of Aadhaar with PAN.
Consequences of Non-Linking:
Failure to link PAN with Aadhaar can result in significant consequences, including rendering the PAN inoperative, higher tax deductions, penalties, and restrictions on financial transactions.
Process of PAN Aadhaar Link Online:
The linking process involves two steps: payment of a prescribed fee on the Income Tax Portal and submission of the PAN-Aadhaar link request. Taxpayers can complete this process conveniently through the Income Tax e-filing portal.
Submit an online request to link PAN Aadhaar
The request can be made in 2 ways:
Income Tax Portal – Pre Login/Post Login
Via SMS
Steps to link PAN Aadhaar on the Income Tax portal(Pre Login)
Visit the e-Filing portal Navigate to the Income tax e-filing portal
Click on “Link Aadhaar” from the left side nav On your Dashboard, under the Link Aadhaar to PAN option, click Link Alternatively, go to ‘My Profile > Personal Details and select ‘Link Aadhaar’
Enter your PAN & Aadhaar details Enter the required details such as PAN, Aadhaar, name as per Aadhaar, and a valid mobile number.
Note: It is mandatory to give your consent by selecting the check box ‘I agree to validate my Aadhaar details’. In case only your year of birth is mentioned in your Aadhaar card, then select the check box asking I have only year of birth on Aadhaar card.
Success Message On success, you will get a message about your Aadhaar-PAN linking request being sent to UIDAI. Once the application is successful, you can verify the status of the application after 2-3 days.
Steps to link PAN Aadhaar on the Income Tax portal (Post Login)
Step 1: Visit the e-Filing portal and log in using your IT portal credentials
Step 2: On your Dashboard, under the Link Aadhaar to PAN option, click Link Alternatively, go to ‘My Profile > Personal Details and select ‘Link Aadhaar’
Step 3: Next, enter the required details such as PAN, Aadhaar, name as per Aadhaar, and a valid mobile number.
Note: It is mandatory to give your consent by selecting the check box ‘I agree to validate my Aadhaar details’. In case only the year of birth is mentioned in your Aadhaar card, then select the check box asking ‘I have only year of birth in Aadhaar card’.
Step 4: On success, you will get a message about your Aadhaar-PAN linking request being sent to UIDAI. Once the application if successful, you can verify the status after 2-3 days.
Steps to link PAN Aadhaar via SMS
Individuals can conveniently link their PAN (Permanent Account Number) with Aadhaar using the SMS facility. Follow these simple steps:
Compose Message: Type a message in the following format: UIDPAN <12-digit Aadhaar> <10-digit PAN> Example Message: For instance, if your Aadhaar number is 256514531487 and PAN is ABCDP5858X, your message should be: UIDPAN 256514531487 ABCDP5858X Send Message: Send the composed message to either 56161 or 567678 from your registered mobile number.
Confirmation: After sending the message, you will receive a confirmation message acknowledging the successful linkage of your PAN and Aadhaar.
Important Keyword: Aadhaar, Income Tax Website, Link Aadhaar PAN, PAN.
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How to check PAN Aadhaar Link Status?
Linking your PAN Aadhaar has become mandatory for all individuals. The Central Board of Direct Taxes (CBDT) has extended the deadline for this process from March 31st, 2023, to June 30, 2023. Failing to complete this linking within the specified timeframe may result in various consequences.
Moreover, if the PAN of the holder is not linked with Aadhaar, it becomes inoperative. Therefore, it is crucial to ensure that your PAN is linked with your Aadhaar. You can verify the status of this linking process on the Income Tax e-Filing website. Keeping track of the status allows you to ensure compliance with this requirement and avoid any potential issues that may arise from non-compliance.
Latest Update
The deadline for linking Aadhaar PAN is set for June 30, 2023. If individuals fail to complete this linking process by the specified date, their PAN will become inoperative. However, if they wish to link their PAN with Aadhaar after June 30, 2023, they will be subject to paying certain penalties.
Linking Completed
Applicable Fee
Before 30 June 2023
₹500
After 1 July 2023
₹1,000
From July 1, 2023 onwards, individuals who have not linked their PAN Aadhaar will face the following consequences as long as their PAN remains inoperative:
No refunds will be issued against such PANs: Taxpayers will not receive any refunds for tax payments made if their PAN is not linked with Aadhaar.
No interest on refunds will be payable: In addition to not receiving refunds, taxpayers will also not be entitled to any interest on the refunds for the period when their PAN is inoperative.
TDS & TCS deducted/collected shall be at a higher rate: Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) will be deducted or collected at a higher rate for transactions involving PANs that are not linked with Aadhaar.
Check Aadhar PAN link status using the Income Tax Portal
Click on Link Aadhaar Status from the left side navigation
Enter PAN & Aadhaar number and click ‘View Link Aadhaar Status’
If your PAN Aadhaar is already linked If your PAN & Aadhaar are already linked, then you will see a pop-up message as your PAN is already linked with your Aadhaar as shown below
If PAN Aadhaar not linked If your PAN & Aadhaar are not linked, you will see a pop-up message as your PAN is not linked with Aadhaar. You can follow these steps to “Link Aadhar” with PAN.
Check Aadhar PAN link status by SMS
Step 1: Compose the message – UIDPAN<12-digit Aadhaar number><10-digit PAN>
Step 2: Send the above SMS to either ‘567678’ or ‘56161’.
Step 3: Upon sending the SMS, you will receive one of the following responses:
If your Aadhaar is already linked with PAN, you will receive the message: “Aadhaar is already associated with PAN (your PAN number) in ITD database. Thank you for using our services.”
However, if your Aadhaar is not linked with PAN, you will receive a message stating: “Aadhaar is not associated with PAN (your PAN number) in ITD database. Thank you for using our services.”
Important Keyword: Form 16D, Form 26QD, Income Tax Website, Section 194M.
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Form 26QD: TDS on Contractual and Professional Payments
The Central Board of Direct Taxes (CBDT) announced that from September 1, 2019, individuals and Hindu Undivided Families (HUFs) making contractual or professional payments must deduct Tax Deducted at Source under section 194M if the total payment exceeds INR 50,00,000 in a financial year. The TDS rate is 5%, and the deducted TDS should be reported using Form 26QD. The recipient of the payment will receive Form 16D as proof of TDS deduction.
For example, if a person pays a professional INR 55 lakh on July 20th in a financial year, they must deposit the deducted tax with the central government by August 30. Additionally, they need to issue the Tax Deducted at Source certificate (Form 16D) by September 15.
Steps to Fill Form 26QD
Visit the Income Tax e-Filing portal Click on the “e-Pay Tax | Challans” option under the Quick Linkssection.
Click on the “Continue to NSDL Website” option. A pop-up message will appear on the screen.
Click on the “Proceed” Click on the “proceed” option under the Form 26QD section.
Fill up the form with the required details like Tenant, Landlord, TDS, Property etc. Click on the “Submit” option to complete the process.
Details Required in Form 26QD
PAN of Deductor/Payer: The Permanent Account Number (PAN) of the person making the payment.
PAN of Deductee/Payee: The PAN of the person receiving the payment.
Nature of Payment: Specify whether the payment is for work under a contract, commission, brokerage, or professional services.
Date of Contract/Agreement: The date when the contract or agreement was signed.
Amount Paid: The total amount paid to the payee.
Certificate Number under Section 197: If applicable, the number of the certificate issued by the Assessing Officer for non-deduction or lower deduction of TDS.
Date of Credit: The date on which the amount was credited to the payee’s account.
Rate of TDS: The percentage of tax deducted at source.
Details of Payment of TDS: Information regarding the payment of the deducted tax to the central government.
