After uncovering large-scale under-reporting of high-value property transactions and cooperative bank deposits, the Income Tax Department has given affected taxpayers time until December 31 to file corrected or updated income tax returns, sources said.
The action follows a series of checks conducted by the department's Intelligence and Criminal Investigation (I&C) Wing on data received from sub-registrar offices (SROs) and cooperative banks, which revealed significant gaps in reporting under the Statement of Financial Transactions (SFT) framework.
Notices Sent Under CBDT's NUDGE Campaign
According to sources, the department has already begun issuing intimations to individuals whose transactions were either not reported or under-reported in the SFT and consequently not reflected in their income tax returns.
- The first round of intimations was sent on December 10
- A second round is scheduled for December 20
- Taxpayers must take corrective action before December 31
This exercise is being carried out under the Non-Intrusive Usage of Data To Guide and Enable (NUDGE) campaign launched by the Central Board of Direct Taxes (CBDT) last month. The initiative aims to encourage voluntary compliance by nudging taxpayers to correct errors without initiating coercive proceedings.
Focus on Property Deals and Cooperative Bank Deposits
Officials said the initial notices pertain to Assessment Year (AY) 2020-21, with subsequent years to follow. The focus on AY 2020-21 is to ensure corrective filings are completed before the cases become time-barred.
The department's analysis of the last five years' data revealed that:
- Property transactions and bank deposits exceeding Rs 20,000 crore in total were not reported under SFT
- Several high-value land deals qualifying for SFT reporting were skipped
- Deposits in cooperative banks, which mandatorily require reporting, were also omitted
What Transactions Must Be Reported Under SFT?
Under the SFT framework:
- Property transactions valued at Rs 30 lakh or more must be reported by sub-registrar offices
- Bank deposits ranging from Rs 10 lakh to Rs 50 lakh, depending on the nature of the account, must be reported by banks
- The data is cross-verified with income tax returns to identify mismatches
Where discrepancies are found, taxpayers are required to update their returns and pay the differential tax, if any.
Who Will Receive Intimations?
The current exercise covers:
- Individuals whose transactions were not mentioned in the SFT
- Taxpayers who did not file returns despite entering reportable transactions
- Cases where the transaction value was under-reported
Sources indicated that the department is prioritising voluntary compliance at this stage, allowing taxpayers an opportunity to correct errors before stricter enforcement measures are considered.
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