Notices have been sent to a large number of taxpayers for mismatches in the income tax returns filed by them and the Form 26-AIS (Annual Information Statement).

26-AIS reflects the account of every income and expenditure of the taxpayer.

Notices were issued to traders and taxpayers as these details are not reflected in their returns. These notices have been sent to the taxpayers in respect of returns for 2022-23 and 2023-24.

Mar 31 deadline

This notice is deemed to have been issued by looking at the information collected by the Income Tax Office every month in Form 26-AIS of the taxpayer with the Income Tax Account.

The Income Tax Department has advised the taxpayers through emails to update the returns for the year 2021-22 before Mar 31. This notice has also been issued to individual taxpayers and traders under e-verification.

Reason for uproar

Income tax experts say that salaried taxpayers show their interest income in ‘other’ sources. However, for businesspersons, delay in payments leads to the inflow and outflow of the interest.

Therefore, interest income and expenditure accounts are kept in books. The difference between interest income and expenditure is shown as part of business income.

Businesspersons do not show this interest income separately in ‘other’ sources like salaried employees. However, TDS (Tax Deducted at Source) is levied on it and a TDS return is also filed.

Still, notices were issued to them. After the uproar over these notices, the Central Board of Direct Taxes (CBDT) said that the notices were machine-generated.

Along with this, taxpayers have also been instructed to file an updated return by depositing 25% more tax in the last year’s return. If they want to update the previous year’s return, they are instructed to add 50% of the amount of tax to be paid.

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