The Income-Tax Department of India has been consistently working towards encouraging taxpayers to voluntarily comply with tax regulations. As part of this endeavor, the department receives financial transaction details from Reporting Entities, including Banks, Forex Dealers, and Sub-Registrars. This information is then utilized to generate the Annual Information Statement (AIS) for taxpayers, accessible through their e-filing accounts. The AIS plays a crucial role in aiding taxpayers in accurately filing their Income Tax Returns. However, despite the majority of Reporting Entities diligently fulfilling their obligations, instances of non-compliance have come to light. This article explores the recent verification conducted on a prominent Bank in Tamil Nadu, highlighting discrepancies and incomplete filings.
Addressing Reporting Entity Compliance Issues:
The Income-Tax Department recognizes the significance of Reporting Entities in facilitating voluntary compliance. As part of its efforts to foster compliance, the department carried out a comprehensive verification of a prominent Bank in Tamil Nadu, focusing on the bank’s compliance with filing correct and (SFTs) complete Statements of Specified Financial Transactions.
Discoveries During Verification:
During the verification process, several discrepancies were identified within the Bank’s financial transactions reporting. It was revealed that the bank had failed to file SFTs in certain cases, and in others, had not provided complete and accurate particulars. The instances of non-compliance included unreported cash deposits exceeding Rs.2,700 crore across more than 10,000 accounts, unreported credit card payments totaling over Rs.110 crore, undistributed dividends exceeding Rs.200 crore, and unreported shares issued worth over Rs.600 crore.
Incomplete Filings and Reporting Defects:
Additionally, the verification process revealed that the SFTs previously filed by the Bank was incomplete in various aspects. Major transactions that were not reported included interest payments exceeding Rs.500 crore, time deposits, cash deposits and withdrawals in current accounts, and more.
Defective Filing of Form 61B:
The verification also exposed the defective filing of Form 61B, which pertains to the Automatic Exchange of Information (AEOI) about account holders residing in other countries. The bank’s filing of this form did not meet the necessary requirements, highlighting a further lapse in compliance.
Prior Instances of Non-Compliance:
The recent verification of the prominent Bank in Tamil Nadu is not an isolated case. The Income-Tax Department had previously conducted verification on two cooperative banks in Uttarakhand, which revealed unreported transactions amounting to several thousand crores. Such instances of non-compliance underscore the importance of stringent monitoring and enforcement measures.
Outreach Programs and Ease of Compliance:
To enhance reporting entity compliance and address challenges faced by them, the Income-Tax Department regularly organizes outreach programs across the country. These programs aim to educate Reporting Entities on their legal obligations, and processes, and facilitate ease of compliance. The department’s proactive efforts to bridge the gap and foster compliance reflect its commitment to effective tax administration.
