The Income Tax Department (ITD) has clarified that the recent messages sent to certain taxpayers regarding financial transactions are purely advisory and are not intended as enforcement or penal actions. The department emphasized that these communications are designed to encourage voluntary compliance and transparency during the income tax filing process for the financial year 2024–25.
Purpose Behind Advisory Messages Sent to Taxpayers
According to the ITD, the advisories were issued only in cases where there appeared to be a significant mismatch between the income or transaction details disclosed in Income Tax Returns (ITRs) and the data received from reporting entities such as banks and financial institutions. These messages aim to inform taxpayers about information already available with the department so they can review their filings accordingly.
Opportunity for Voluntary Correction and Compliance
The department stated that the primary objective of this outreach is to give taxpayers an opportunity to voluntarily correct discrepancies. Taxpayers are encouraged to check their Annual Information Statement (AIS) and provide appropriate feedback through the Compliance Portal. Where discrepancies are found, individuals may revise an already filed return or submit a belated return if they have not filed one yet.
Key Deadline for Revising or Filing Belated Returns
The ITD has reminded taxpayers that the last date to revise or file a belated return for the Assessment Year 2025–26 is December 31, 2025. Taxpayers have been advised to respond promptly through the Compliance Portal if any inconsistencies exist, while those confident of accurate filing may safely ignore the communication.
Refund Delays Linked to High-Value and Red-Flagged Claims
In recent months, some taxpayers experienced delays in receiving refunds as the department scrutinized high-value or red-flagged refund claims. CBDT Chairman Ravi Agrawal had earlier explained that this review was triggered by instances of incorrect deductions and wrongful claims, although low-value and legitimate refunds continued to be processed.
Targeted Compliance Drive on Foreign Assets and Income
Separately, the Income Tax Department initiated a focused “nudge” campaign to improve compliance in reporting foreign assets and income for Assessment Year 2025–26. This initiative is based on information shared by foreign jurisdictions under the Automatic Exchange of Information (AEOI) framework.
Identification of High-Risk Cases and Advisory Outreach
In the first phase, the Central Board of Direct Taxes (CBDT) identified around 25,000 high-risk cases where foreign assets were suspected but not disclosed in ITRs. These taxpayers were to receive SMS and email advisories requesting them to review their AIS and revise returns by December 31, 2025, to avoid penalties. The campaign was expected to expand further to include more cases.
Mandatory Disclosure and Legal Implications
The department reiterated that accurate disclosure of foreign assets and income is mandatory under the Income-tax Act, 1961, and the Black Money (Undisclosed Foreign Income and Assets) Act, 2015. Non-compliance under these laws can attract severe penalties, making timely and accurate reporting crucial for taxpayers.
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