All about Non Filers Monitoring System for AY 2015 16

All about Non Filers Monitoring System for AY 2015 16

Why now?

It has been a constant endeavor of current Government to unearth black money and increase tax revenues of the country. The Government is persistent and wholesome in its approach by introducing a mix of stringent provisions in the tax laws, launch Amnesty Scheme and most importantly build upon a wholesome database about the income that may have escaped the Tax network.

CBDT has said it would continue to pursue the non-filers vigorously till all high potential non-filers are covered. ITD has asked its officers to impose penalty and initiate prosecution in such cases to ensure compliance. Just to put the numbers in perspective, number of non-filers with potential tax liabilities has risen from 12.19 lakhs in 2013 to 22.09 lakh in 2014 and further mounted to 58.95 lakh in 2015.

Income Tax Act, 1961 authorities to prosecute the non-filers of Income Tax Return (ITR). Maximum punishment provided under this law is 7 years of rigorous imprisonment for willful non-filers. A list of cases for further processing is shared with tax officers, who have been asked to examine every such case of non-filer to arrive at a decision whether a particular case was fit for prosecution under the law. The direct tax collection target for 2016-17 has been pegged at Rs. 8.47 lakh crore, almost half of which is to come from the Mumbai and Delhi circles.

ITD expressed concern over Rs. 62,233 crore demand outstanding on account of short payment, short deduction, late payment interest and late filing fees. Huge demand lying in the records is a cause of concern and is also an opportunity to augment revenue collections. What is Non –Filers Monitoring System (NMS)?

What is Non-Filers Monitoring System(NMS)?

In an attempt to make use of its wide network, the Income Tax Department (ITD) has launched a pilot project namely “The Non-filers Monitoring System (NMS)”. NMS is a result of combined information network gathered through –

  • Annual Information Return (AIR),  

  • Centralized Information Branch (CIB),  

  • TDS/TCS Statement etc.

Once the NMS gathers sufficient information that potential tax liability arises but either Income Tax Return for that year is not filed or has the reason to believe that it is under-stated, it sends an e-mail. The Central Board of Direct Taxes (CBDT), government body, has made available in the ‘Compliance Module’ on the e-filing portal of the Income Tax Department the information relating to the identified non-filers. The information is visible only to the specific PAN holder when they log  into “The PAN holder will be able to respond electronically and retain a copy of the submitted response for record purpose,” CBDT said.

If you have received the e-mail from NMS, you are one of the 6.8 Million people identified by the ITD who have not complied with the Return filing requirement.

What should I do if I receive e-mail from NMS?

No need to worry if you have already filed the Income Tax Return (ITR). Basically, the NMS seeks to know if you have filed the ITR if you have a considerable cash flow size. If not, it seeks to know the reasons for not filing and ask you to file the same in case you should have already. If you have not filed the ITR, you are required to furnish the reason for non-filing, which may be any of the following:-

  1. Return under preparation,

  2. Business has been closed,  

  3. No taxable income,  

  4. Others – particulars of “others” required to be submitted.

There are 2 tabs where you may be required to provide inputs:

  1. Filing of Income Tax Return (covered above),

  2. Related Information Summary (RIS).

RIS seeks to corroborate the information gathered by NMS through third party sources. Following options are given:

  1. Self-Investment/ expenditure is out of exempt income,  

  2. Self-Investment/ expenditure is out of accumulated savings,  

  3. Self-Investment/ expenditure is out of gifts/ loans from others,  

  4. Self-Investment/ expenditure is out of foreign income,  

  5. Self-Income from transaction is exempt,  

  6. Self-Income from transaction is below taxable limit,  

  7. Self-Income from transaction relate to different Assessment Year (AY),  

  8. Self-Not Known,  

  9. Other PAN,  

  10. Not Known,  

  11. I need more information.

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