The Income-tax department said on X said that they have "identified certain inconsistencies in the data of the securities market (SFT-17) provided by one of the Reporting Entities." It appears that due to this the Income-tax department's 'Compliance Portal' showed highly inflated transaction values for some taxpayers in their annual information statement (AIS)

ITR portal shows inflated income to some taxpayers; Rs 450 showed as Rs 45000. Here's what to do if you face similar issue Some taxpayers say that their sale consideration of Rs 4 lakh got inflated to Rs 17 crore. There are many taxpayers who complained on X about the 'Compliance Portal' showing inflated transaction values in their AIS

The ‘Compliance Portal’ launched by the Income-tax department is showing inaccurate/inconsistent financial information for several taxpayers, as per numerous complaints on social media and chartered accountants. As per chartered accountants, the compliance portal is showing highly inflated transaction value and advance tax liability.

In this regard the Income-tax department has said on X in a post dated March 11, 2024, “Based on feedback from taxpayers on the e-campaign for Advance Tax, the Department has identified certain inconsistencies in the data of the securities market (SFT-17) provided by one of the Reporting Entities. The reporting entity has been asked to submit a revised statement based on updated information. Hence, the data on AIS will be updated. Taxpayers are advised to wait for further updates on AIS based on the revised statement.”

Chartered accountants say that the 'Compliance Portal' is a step in the right direction but there exists certain errors which needs to be fixed. “The compliance portal is doing commendable work by providing the taxpayers with information about their financial transactions beforehand. This portal helps taxpayers to make a complete disclosure of income in income-tax returns and avoid the possibility of tax notices due to omissions to include certain income in the ITR. However, in some cases, we have seen that the portal has grossly erred in calculating the mismatch between the information available and the transaction carried out by the assessee. For example, in one particular case, we saw that when an assessee had about Rs 4 lakh worth of transactions from the sale of mutual funds and shares, the portal put it as Rs 17 crore worth of sales,” says Naveen Wadhwa, VP, Taxmann.

Such inflated figures, unless corrected, would consequently increase the taxpayer’s income also when it is computed, Wadhwa explained.

What is the glitch that is affecting the ‘Compliance Portal’?

According to Chirag Chauhan, a practising chartered accountant from Mumbai, the compliance portal is showing highly inflated transaction value mainly of those taxpayers who have sold shares or property. “In our case, the value of assets was increased by two zeros, for example, one share of Rs 450 of ITC is shown as Rs 45000/- and property sold of Rs 1.2 crores is shown as Rs 12 crores, resulting in huge advance tax,” says Chauhan.
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CA Chirag ChauhanSource: CA Chirag Chauhan, practising chartered accountant from Mumbai

Why is the glitch in the compliance portal occurring?

Chartered accountants say that the problem in Compliance portal might have occurred due to technical glitch or problems or error in reporting by depositories like National Securities Depository Limited (NSDL) or Central Depository Services Limited (CDSL) or stock exchange’s end.

“Reasons for such issues at the Income tax Compliance Portal can be technical glitch at the end of the reporting entity (NSDL or CDSL or stock exchange) or at the end of Income tax,” says chartered accountant Mihir Tanna, associate director-direct tax, S.K Patodia and associates.

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Tanna further explains that depositories (NSDL or CDSL) are required to furnish the Statement of Financial Transactions (SFT) to the Income Tax Department (ITD) for all demat account holders having debit transactions during the Financial Year. “However, it may be noted that sale consideration / cost of acquisition is computed based on the end of date (EOD) prices of the trade date or best available EOD price for that specific security on the date of transfer. Trader/Investor can modify sale consideration / modify cost of acquisition and other related information appearing in your SFT,” says Tanna.

According to Chauhan, “The reason for the glitch in Income tax department’s Compliance portal may be because of usage of any software which erred in analysing the difference between a comma and a full stop. For example: the software might have read 4500.00 as 450,000.”

"Inflated transaction values would imply a higher income for the taxpayer hence increase the advance tax liability of the taxpayer. Taxpayer should ignore such inflated wrong data and pay advance tax as per actual data available with them," says Chauhan.

What should taxpayers do now?

Income tax department’s post on X said to wait for AIS to be revised, however chartered accountants advise to make use of the feedback option to intimate the tax department about the error noticed by the taxpayer.

“In my opinion taxpayers should make use of the feedback system to intimate the income-tax department about the errors noticed by the taxpayers. After logging-in go to the ‘Services’ tab and click on ‘Annual Information Statement (AIS)’ and after clicking on ‘AIS’ tab, taxpayers are advised to access the Compliance portal and provide necessary feedback, for the glitches or discrepancies noticed by them,” says Tanna.

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This story originally appeared on: India Times - Author:Faqs of Insurances