Non-Filers Monitoring System (NMS) – All your transactions are under watch

Non-Filers Monitoring System (NMS) – All your transaction are under watch

You may have noticed people saying that they received notice from income tax department for non-filing of their income tax returns for previous years. Yes, these notices are for the people who thinks that they are very smart and can befool government and can hide their tax liabilities easily. People just submit form 15g/h and thinks now nobody will notice their transaction and they can do what they want.

But this time something is different because it is the endeavor of current government to take out all black money and increase government revenue. To fulfill this, promise the Income Tax Department (ITD) has launched a pilot project namely “The Non-Filers Monitoring System (NMS)”. This system was under compliance management system New Delhi.NMS is a result of combined information network gathered through –

• Annual Information Return (AIR),
• Centralized Information Branch (CIB),
• TDS/TCS Statement etc.

Once the NMS gathered all the required information from above framework, it will analysis the data and depending the result it will issue notice to customer for either non filling or short tax filing.

Sample notice issued to non-tax payer

Dear Taxpayer, As per our records, it is observed that you have not filed your Income Tax Return for Assessment Year XXXX-XX.
Please submit your online response as under:
Step 1: Login to e-filing portal
Login to income tax e-filing portal at https://incometaxindiaefiling.gov.in
Step 2: View Information summary
Information summary can be viewed under compliance section on the portal. Mention if the information relates to other PAN.
Step 3: Login to e-filing portal
Upload the return on e-filing portal after paying due taxes. If return is already filed, submit details under ‘Filing of Income Tax Return’ under compliance section. You may keep the printout of submitted response for record. Non-filers with potential tax liabilities are identified and monitored under Non-filers Monitoring System
(NMS).
A “Step by Step Guide” for NMS is also available for detailed guidance on the e-filing portal home page under the ‘Help’ section. If you need any assistance in submitting the response, please call the e-filing toll free number 1800 4250 0025.

Please submit response by XXXXXX
Note: Please ignore this mail, if you have already submitted the return/response.
Regards,
e-filing Team for Compliance Management Cell
Income Tax Department

Here is the information collected by compliance management system to analysis for tax liabilities or correct return filling.

1.Annual Information Return: Value and nature of transaction reported under AIR

• Deposit of cash up to Rs 10,00,000/- or more in saving account in a year: Aggregate of all cash transaction in saving account up to Rs 10,00,000 or more are reported in AIR. Aggregate means suppose you have account in three different banks and you have done cash transaction then if aggregate of these transaction exceeds 10,00,000 then it is reported in AIR. Remember every time baker ask for PAN card each and every high value transaction. ALL fixed deposit transaction up to 10,00,000 lakhs and more are reported in AIR. However, renewal and reinvestment are excluded.
• Paid Rs. 2,00,000/- or more against credit card bills : It means credit card payment of Rs 2,00,000 or more are reported in AIR. No matter what is your total bill amount, what is your credit card limit but whenever you make payment of credit card through cash and its value is 200000 or more it is reported in AIR.
• Investment of Rs. 2,00,000 or more in Mutual Fund
• Investment of Rs. 5,00,000/- or more in Bonds or Debenture: If you purchased bonds or debenture amounting to Rs 5 Lakh or more in a year then is reported in AIR. The reporting will exclude renewal of the bonds or debentures.
• Investment of Rs. 1,00,000/- or more for acquiring shares
• Purchase of Immovable Property valued at Rs. 30,00,000/- or more : he property means all types of property including land, plot, building, commercial, residential etc. It is to be noted that property value is considered on on valuation rather then owner. For E.g. If I and Abhishek buy a property of Rs 30.00 laksh then this transaction will be reported in AIR. Also be noted that if property value is Rs 28.00 lakhs and stamp duty is 2.00 lakhs resulting total value 30.00 lakhs then also transaction is reported in AIR.
• Investment in RBI Bond of Rs. 5,00,000/- or more : It means Purchase of Reserve Bank of India bonds amounting in the aggregate to Rs 5 Lakh or more in a year

• AIR-001: Cash deposits aggregating to Rs. 10,00,000/- or more in a year in any savings account.
• AIR-002: Paid Rs. 2,00,000/- or more against credit card bills.
• AIR-003: Investment of Rs. 2,00,000 or more in Mutual Fund.
• AIR-004: Investment of Rs. 5,00,000/- or more in Bonds or Debenture.
• AIR-005: Investment of Rs. 1,00,000/- or more for acquiring shares.
• AIR-006: Purchase of Immovable Property valued at Rs. 30,00,000/- or more.
• AIR-007: Investment in RBI Bond of Rs. 5,00,000/- or more.

2. Central Information Branch (CIB)

To more strengthen the system, In 1975, the Income Tax Department formed the Central Information Branch (CIB).

CIB report would include information relating to financial transactions like investment, expenses, payment of taxes, etc and details of persons who are involved in some specified activities.

• CIB- 94: Sale of Motor Vehicle
• CIB-151: Transfer of immovable property
• CIB-154: Transfer of capital assets where value declared for the purpose of stamp duty is more than sale value
• CIB-157: Purchase of Immovable property valued at Rs. 5 lakhs or more
• CIB-183: Time deposit of Rs 1,00,000/-
• CIB-185: Purchase of Bank Draft of more than Rs. 50,000/- in cash
• CIB 321: Share Transactions more than Rs. 20,000/-
• CIB-403: Investment in Fixed Deposit/Time Deposit exceeding Rs. 2,00,000/-
• CIB-406: Payment made against Credit Card more than Rs 2,00,000/-
• CIB-410: Cash deposit aggregating of Rs 200000 on a day
• CIB-502: Contract of Rs. 10,00,000/-or more in the Commodities Exchange
• CIB-514: Interest paid by co operative credit Society
• CIB: Payment in connection with foreign travel amount exceeding Rs. 1,00,000/- at one time
• CIB: Payment to Hotel and Restaurants exceeding Rs. 1,00,000/- at one time

3. TDS return

TDS stands for tax deducted at source, it is a method of collection of tax at the source of the income , tax has to be deducted at the time of making payment. Person who makes the payment – deducts & deposits TDS with the government. Besides depositing tax, as a Deductor, it is also mandatory to file a TDS Return.

A TDS Return is a quarterly statement which has to be submitted to the income tax department. It has details of TDS deducted and deposited by you. TDS Returns include details of PAN of the deductor and deductees, particulars of tax paid to the government.

• TDS-94A : TDS Return – Interest other than interest on security (section 194A)TDS-92B : TDS Return – Salary to Employees (section 192)
• TDS-195 : TDS Return – Payment to Non-residents (Section 195)
• TDS-196A : TDS Return – Income in respect of Units of Non-residents (Section 196A)

Note : Details of transactions in TDS/TCS can be views in income tax website under menu “view Credit Statement (Form 26AS) in “My Account”

4. Stock Broker'

• STT-01: Purchase of equity share in a recognised stock exchange
• STT-02: Sale of equity Share (settled by actual delivery or transfer) in a recognised stock exchange
• STT-03: Sale of equity Share (settled by otherwise than by the actual delivery or transfer) in a recognised stock exchange
• STT-04: Sale of option in securities (derivative) in a recognised stock exchange
• STT-05: Sale of Futures (derivative) in a recognised stock exchange

5. Others:

• • EXC-001: Cash transactions exceeding Rs. 10,00,000/- in a month
• • EXC-002: Turnover from services reported in Service Tax Return

What to do when you receive such notices from Income tax?

Step 1: Login with username and password Income tax
Step 2: Navigate to Compliance > View and Submit Compliance. Here you can view your non filling status.

Step 3: Click on ‘View’ to submit your response to the non-filing compliance notice.
Step 4: Navigate to Filing of Income Tax Return (Image)

Step 5: Navigate to Assessment Year for which Return Not Received
Step 6: You have two options to respond
• (a) ITR has been filed
• (b) ITR has not been filed
Step 7: If you select option (a), you need to provide
• Mode of filing the ITR
• Date of filing the ITR
• Acknowledgement Number
Step 8: If you select option (b) of step 6, you need to provide one of the following resons
• Return under Preparation
• Business has been Closed
• No Taxable Income
• Others
Step 9: Navigate to Related Information Summary
Step 10 : Choose relevant option under Information Related To (image)

• Self-Investment/ expenditure is out of exempt income: This option is to be selected if the mentioned third party information is related to any investment or expense of the taxpayer, plus, it’s out of exempt income.
• Self-Investment/ expenditure is out of accumulated savings: When the third party information is related to an investment or expense of the taxpayer, plus, it’s made out of accumulated savings, this option is to be selected.
• Self-Investment/ expenditure is out of gifts/ loans from others: Select this option if the third party information relates to an investment or expense of the taxpayer and is made out of gifts/loans from others.
• Self-Investment/ expenditure is out of foreign income: Select this option if the third party information relates to an investment or expense of the taxpayer and is made out of foreign income.
• Self-Income from transaction is exempt: Select this option if the third party information relates to an income or receipts of the taxpayer and the same is exempt under the income-tax act.
• Self-Income from transaction is below taxable limit: Select this option if the third party information relates to an income or receipts of the taxpayer and such taxable income is below taxable limit (Rs 2,50,000).
• Self-Income from transaction relate to different AY: Select this option if the third party information relates to an income or receipts of the taxpayer and the same is taxable in a different year.
• Self-Not Known: Select this option if the third party information relates to an income or receipts of the taxpayer and there is any other explanation.
• Other PAN: Select this option if the third party information relate to another taxpayer. In this case, the PAN of such other taxpayer has to be mandatory provided.
• Not Known: This option is to be selected if the taxpayer has no information about the third party information.
• I need more information: Select this option if the taxpayer knows about the third party information but needs more details to submit response.

Step11. Download your repose pdf for future reference.

Above steps are very easy to perform, but you should prepare all the required details with relevant proof before proceeding these steps. You may take help of CA or other agencies to prepare your e filling statement or (you can also drop mail to us and we will assist you in this matter). Why I am saying this because if you select any wrong option then department may select your case for scrutiny and send you notice u/s 148 of income Tax act for further investigation. For example, you have chosen option no taxable income without explaining proper source of income for high-value transaction.