Article Brief
Get a detailed understanding of the Income Tax e-Verification Scheme 2021, and how it impacts taxpayers. Learn everything you need to know.
On December 13, 2021, the Central Board of Direct Taxes (CBDT) under the Ministry of Finance introduced the Income-tax e-Verification Scheme, 2021, under Notification No. 137/2021. This scheme, designed to enhance the efficiency and accuracy of income tax processes, leverages digital technologies to streamline the verification of taxpayer information.
Notably, the income-tax department has, in recent years, issued a large number of notices under section 133(6) of the Income-tax Act as part of the e-verification process, highlighting the need for a structured and automated approach. The scheme is enacted under the powers conferred by sections 135A of the Income-tax Act, 1961.
Objectives of the Scheme
The primary aim of the e-Verification Scheme, 2021, is to improve the process of collecting and verifying information related to income tax returns and other financial transactions. It intends to minimize human intervention, thus reducing errors and ensuring a more transparent and efficient verification process.
Scope and Applicability
The scheme covers a wide range of activities, including:
- Calling for Information: Under sections 133, 133B, 133C, 134, and 135 of the Income-tax Act, the scheme allows for the collection and verification of information.
- Utilization of Information: The scheme applies to information already in possession or made available by various authorities to the Income-tax Department.
Electronic Collection and Verification
The scheme outlines a detailed process for electronic collection and verification:
- Initial Collection: The Commissioner of Income-tax (e-Verification) collects information as per procedures laid down by the Principal Director General or Director General of Income-tax (Systems).
- Automated Communication: The initial verification involves automated communication to the information source. This process includes cases where no response is received from the taxpayer within 90 days or where no registered email or mobile number is available.
- Risk Management: The information is processed through a risk management strategy to identify low-risk cases for closure, while high-risk information is further verified by the Prescribed Authority.
Allocation and Verification
Information requiring further verification is randomly allocated to the Prescribed Authority using an automated system. The Prescribed Authority verifies the information and sends a preliminary verification report to the Commissioner of Income-tax (e-Verification), who then prepares a final verification report.
No Personal Appearance Required
A notable feature of the scheme is that it does not require personal appearance. All communications and responses are handled electronically, ensuring convenience and efficiency. In exceptional cases, personal appearances are allowed via video conferencing.
Authentication and Communication
All electronic records under the scheme are authenticated using digital signatures by the relevant authorities. Communication between various stakeholders, including the Commissioner of Income-tax (e-Verification), the Director General of Income-tax (Systems), and the taxpayers, is conducted exclusively through electronic modes.
Procedural and Administrative Provisions
The scheme empowers the Director General of Income-tax (Intelligence and Criminal Investigation) and the Director General of Income-tax (Systems) to specify procedures and processes for effective implementation. This includes setting up standard operating procedures, managing administrative functions, and providing a grievance redressal mechanism.
Conclusion
The Income-tax e-Verification Scheme, 2021, represents a significant step towards modernising the income tax verification process in India. By leveraging digital technologies and automated systems, the scheme aims to enhance transparency, reduce manual errors, and ensure a more efficient verification process. This initiative reflects the government's commitment to improving the ease of doing business and fostering a taxpayer-friendly environment.
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Disclaimer: The article is only for educational purposes and is not to be construed as tax advice. The relevant provisions of the Income-tax Act may be referred to, for complete understanding.
