The Income Tax Department (ITD) moved to clarify the nature of its recent communications to select taxpayers on Thursday, stating these messages are purely advisory and designed to encourage voluntary compliance, not to launch enforcement actions.
Advisory Nature of Communications Explained
In a post on social media platform X, the tax authority explained that these advisories were sent only in instances where a significant gap was observed between the disclosures in filed Income Tax Returns (ITRs) and the financial information received by the department from various reporting entities throughout the year.
"These communications are to facilitate taxpayers and make them aware of the information available with the ITD regarding transactions reported by the reporting entities," the department stated. It emphasised that this outreach is confined to specific cases where discrepancies are evident on a preliminary, or prima facie, basis.
Opportunity for Voluntary Correction
The core objective, according to the ITD, is to provide individuals an opportunity for voluntary correction. Taxpayers who have received these messages are urged to review their Annual Information Statement (AIS) meticulously and submit their feedback through the official Compliance Portal.
Where necessary, individuals can take corrective action by revising returns already filed or by submitting a belated return if they haven't filed one for the relevant assessment year. The department reminded everyone that the deadline for revising or filing a belated return for Assessment Year 2025–26 is December 31, 2025.
"Taxpayers are requested to respond promptly via the Compliance Portal if discrepancies exist or ignore if your filing is correct," the ITD advised.
Broader Compliance Push and Refund Scrutiny
This advisory campaign aligns with a broader push by the Central Board of Direct Taxes (CBDT) to improve compliance. Last month, the department initiated a targeted "nudge" campaign focusing on unreported foreign assets and income for AY 2025-26, based on data received from foreign jurisdictions under the Automatic Exchange of Information (AEOI).
In its first phase, the CBDT identified approximately 25,000 high-risk cases where foreign assets seemed to exist but were not disclosed in ITRs. These taxpayers were contacted via SMS and email advisories, asking them to review their AIS and revise returns by the December 2025 deadline to avoid penalties.
Simultaneously, the department has been scrutinising high-value and red-flagged refund claims, which CBDT Chairman Ravi Agrawal acknowledged on November 17 had delayed some refunds. He clarified that while analysis of wrongful claims continues, legitimate refunds are expected to be processed by December. Agrawal had earlier pointed out that the review was prompted by instances of incorrect deductions and claims.
The department underscores that accurate disclosure of foreign assets and income is mandatory under the Income-tax Act, 1961, and the Black Money Act, 2015, both of which prescribe strict penalties for non-compliance.
