Income tax high-value transactions: Submit response under e-Campaign (compliance portal)

The income tax department uses various data analysis techniques to trace non-filers of income tax returns or underreporting income. In this endeavour, the department is reaching out to various government departments to obtain information about individuals spending high amounts but not filing ITR or underreporting their income.

What are high-value transactions?

The taxpayer shall report transactions in the income tax return if the transactions are incurred in higher denominations and if they surpass a certain threshold. The department coordinates with various government agencies to obtain financial data of taxpayers indulged in high-value transactions but not reported while filing the ITR.

Here is a list of transactions for which a taxpayer may receive a notice from the Income Tax Department:

Sr. No.	Transaction	Threshold (Rs)	Authority concerned
1	Cash deposits in the fixed deposit account	10,00,000	Banks need to disclose a transaction if the amount deposited exceeds the threshold to the Director of Income Tax by filing Form 61A, known as Statement of Financial Transactions.
2	Cash deposit or withdrawal in a savings bank account	10,00,000	Banks need to disclose a transaction if the amount deposited exceeds the threshold to the Director of Income Tax by filing Form 61A, known as Statement of Financial Transactions.
3	Cash deposit or withdrawal in a current account	50,00,000	Banks need to disclose a transaction if the amount deposited exceeds the threshold to the Director of Income Tax by filing Form 61A, known as Statement of Financial Transactions.
4	Sale or purchase of an immovable property	30,00,000	The Property Registrar/Sub-registrar must report a transaction exceeding the threshold via Form 61A.
5	Investments in shares, mutual funds, debentures and bonds in cash *If the transaction is related to the sum transfer from one scheme to another, then reporting is not required.	10,00,000	Mutual Fund Trustee, Stock Exchange is required to report a transaction exceeding the threshold via Form 61A.
6	Payment of credit card bill in cash	1,00,000	Banks need to report transactions exceeding the threshold via Form 61A.
7	Payment of credit card by any mode other than cash such as NEFT, cheque etc.	10,00,000	Banks need to report transactions exceeding the threshold via Form 61A.
8	Sale of foreign currency	10,00,000	Banks need to report transactions exceeding the threshold via Form 61A.
9	Cash payment for purchasing bank draft or prepaid RBI instruments	10,00,000	Banks need to report transactions exceeding the threshold via Form 61A.

Steps taken by the IT Department to trace high-value transactions

Below are some of the measures taken by the department to trace high-value transactions:

1. Upgraded Form 26AS:
2. The Department has upgraded Form 26AS to reflect Specified Financial Transactions (SFT). Moreover, it has introduced ‘Annual Information Statement (AIS)’ where you can view all the financial information. The specified institutions, such as registrars, banks, post offices, stock exchanges, etc., must report transactions exceeding the specified threshold to the income tax department. These transactions are then reflected in the AIS portal so that the taxpayer can voluntarily disclose all the information based on the AIS information.
3. Applicability of TDS on cash withdrawal: To trace high-value transactions, the government has proposed that the banks must deduct TDS at 2% on cash withdrawals more than Rs 1 crore during the financial year. If the person does not file ITR for the last three financial years, then TDS at 2% shall be deducted for cash withdrawals exceeding Rs 20 lakh, and for cash withdrawals exceeding Rs 1 crore, TDS will be deducted at 5%.
4. Mandatory filing of returns: An individual is required to file ITR if income exceeds Rs 2,50,000. But, from 1st April 2019, ITR filing is mandatory if the individual has entered into certain specified high-value transactions, even if the income is less than Rs 2,50,000. For example, deposits in one or more current a/c maintained with a bank/co-operative bank are more than Rs 1 crore, foreign travel expenditure is in excess of Rs 2 lakh, or electricity bill expenditure is in excess of Rs. 1 lakh during the year.

Action to be taken if Form 26AS reflects SFT transactions

Firstly a taxpayer must verify that the SFT transactions reported in the Form 26AS are correct. Subsequently, a taxpayer must ensure to report the said high-value transaction while filing the ITR, and the tax liability on the same has been accurately calculated. Any error or mismatch in reporting such transactions may trigger an income tax notice.

Launch of e-Campaign 

The income tax department has launched an e-campaign for the voluntary compliance of income tax for the convenience of taxpayers. 

The campaign focuses on the assessees/taxpayers who are either:- 

1. Non-filers of income tax return.
2. Have discrepancies/deficiencies in their returns

Under this e-campaign, the income tax department sends email/SMS to identified taxpayers to verify their financial transactions related to information received by the IT department from various sources such as SFT, TDS, TCS, etc. The department can collect information related to GST, imports/exports, transactions in securities, derivatives, commodities and mutual funds through various third parties. 

How to do compliance online?

If you have received an email or SMS for high-value transactions or non-filing of returns, you can respond to the income tax department by following the below steps:

Step 1: Log in to your income tax e-filing account.

Step 2: In the home page, go to ‘Pending Actions’> ‘e-Campaign (AY 2021-22 Onwards)’.

Step 3: After redirecting from the e-filing portal, the landing page of the e-campaign view will be displayed. 

For example, in the case of non-filing of income tax returns, it will show the below information under the ‘e-Campaign’ list.

Following are the categories where the response is expected from the taxpayer under e-campaign: 

• Preliminary Response
• Feedback on Information on AIS

Preliminary Response

Under the ‘Preliminary Response’ section, the taxpayer is expected to respond to relevant questions. The queries under the Preliminary Response section are based on campaign type (non-filing of return/certain high-value transactions done by the taxpayer).

For example, for campaign type – ‘Non-Filing of Income Tax Return’, the taxpayer is expected to submit a response whether an income tax return has been filed or not.

Step 1: Click on the ‘Provide Response’ button provided against the ‘Preliminary Response’ section.

Step 2: On the next page, respond by selecting the relevant drop-down.

Step 3: Provide additional details as required by the income tax department. For example, For the question ‘Whether Income Tax Return (ITR) has been filed?’ the following additional details are required: 

1. If ITR has been filed:
   • Acknowledgement Number – Enter the Acknowledgement Number generated for the Income Tax Return filed for the relevant A.Y.
   • Date – Select Date of Income Tax Return filing
   • Mode – Select Mode of Income Tax Return filing (i.e., e-Filed return | Paper filed return)
   • Circle/ Ward and City – Enter Circle/Ward and City of the taxpayer
   • Remarks – Enter Remarks for Income Tax Return filing (Optional)
2. If ITR has not been filed
   • Reason – Select the Reason for not filing the ITR
   • Remarks – Enter Remarks for not filing the ITR

Step 4: After filling in all the relevant information, submit the response. You can download the preliminary response submitted from the ‘Activity History’ screen.

If you don’t have active e-campaigns or e-verifications, you will get the message – No Compliance Record has been generated for you.

Submit Feedback on Information in AIS

You have to provide feedback on the information under the e-campaign, where no feedback has been provided. 

You must provide feedback on the L1 information, which is marked as ‘Expected’ as shown in the below screenshot.

To know more about how to give feedback, you can click on the link below:-

Submit feedback on information in AIS.

In this way, you can submit the response to the income tax department for the notice on the high-value transactions or non-filing of the income tax return.