e-Verification Scheme, 2021

The Central Board of Direct Taxes vides a notification dated 13th December 2021 has published the e-Verification Scheme, 2021. e-Verification Scheme, 2021 covers faceless information collection from the assessee and its verification. The Scheme shall be applicable to deal with the mismatch of the information uploaded to the taxpayer's registered account.

What is the E Verification Scheme 2021?

The Income Tax Department introduced the E Verification Scheme 2021 to address and resolve mismatch issues encountered by taxpayers on the IT portal. Launched initially on December 13, 2021, with a pilot program starting in September 2022 and full implementation in February 2024, the scheme allows taxpayers to respond to discrepancies through the e-verification portal. It targets mismatches between third-party details, such as interest and dividend income, and the income tax returns filed by taxpayers. Issues related to the Financial Years 2021-22 and 2022-23 are detailed on the Compliance portal, with taxpayers being notified via SMS and emails about any mismatches.

The objective of the e-Verification Scheme, 2021

The e-Verification Scheme is notified under a provision in Income Tax Act 135A that proposes faceless information gathering aimed at imparting efficiency, transparency, and accountability by eliminating the interface between the income-tax authority and the assessee. It also seeks to optimize the use of the CBDT department’s resources.

Scope of the e-Verification Scheme

The scope of the Scheme shall be in respect to collecting information under sections 133, 133B, 133C, 135 of the Income Tax Act.
The information will also be collected if the register of companies is to be inspected in a faceless way to the extent technologically feasible under section 134 of the Income Tax Act.

Applicability of e-Verification Scheme

The scheme shall be applicable for processing the information which has the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) or made available to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems by following Tax Authorities:

The Director-General of Income-tax (Intelligence and Criminal Investigation)
The Commissioner of Income-tax in charge of the Centralized Processing Centre for processing of returns
The Commissioner of Income-tax in charge of the Centralized Processing Centre (TDS) for processing of statement of tax deducted at source

Electronic Collection and Verification of Information

As per the e-Verification Scheme, 2021, the government has empowered the tax office to gather more information from the taxpayers and reconcile it with information received from other specified agencies. In case there is any mismatch between the amount reported by the taxpayer and the amount reported after such first e-verification, the information could be passed for the intelligence and criminal investigation

Procedure for Electronic Collection and Verification of Information

The Procedure for Electronic Collection and Verification of Information under the e-Verification Scheme, 2021 is explained below:

Collection of Information

The Commissioner of Income-tax shall collect the information from the assessee. The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) will make available the information to the Commissioner of Income-tax. The Scheme shall be applicable to deal with the mismatch of the information uploaded to the taxpayer's registered account.

The Commissioner of Income-tax shall collect information that was uploaded to the registered account or sent on the registered mobile number of the assessee and not accepted by him or in a case where no response has been received from the assessee within ninety days
The Commissioner of Income-tax shall collect in respect of which no registered email account or mobile number is on record

Initial e-verification

The Commissioner of Income-tax (e-Verification) shall process the information made available to it for initial e-verification. The initial e-verification will be through an automated issuance of communication to the source from where the information is received and the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) will enable such automated communication.

Analysis of Risk Criteria

If the mismatch between the amount accepted by the assessee and the amount reported by the reporting entity persists, the information after such initial e-verification shall be run through a risk management strategy laid down by the CBDT.

The information found to be no or low risk on such risk criteria, where no further action is required, shall be processed for closure.
The remaining information will be transferred electronically by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), to the Prescribed Authority through a process of automated allocation system.

Preliminary Verification Report

The verification of the information will be completed by the Prescribed Authority in the manner as per the procedure laid down in this regard by the Director-General of Income-tax (Intelligence and Criminal Investigation), with the prior approval of the CBDT. The information verified shall be sent back electronically in the form of a preliminary verification report for verification to the Commissioner of Income-tax (e-Verification).

Final Verification Report

Based on the final verification report, the information found to be a low risk under the criteria approved by the CBDT shall be considered for closure. The remaining information in the form of the final verification report shall be processed in the following process:

If the information pertains to a pending scrutiny assessment, it shall be made available electronically to the Faceless Assessing Officer or Jurisdictional Assessing Officer
If the information does not pertain to a pending scrutiny assessment, it shall be utilized for further necessary action under the provisions of the Income Tax Act.

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Frequently Asked Questions

Common questions about E.

The e-Verification Scheme, 2021 is an initiative introduced by the Income Tax Department to address and resolve mismatches between the information reported by taxpayers in their income tax returns and the details received from third-party sources, such as interest and dividend income. It aims to collect and verify information in a faceless manner, promoting efficiency, transparency, and accountability.

The primary objective of the e-Verification Scheme, 2021 is to collect and verify information from taxpayers in a faceless manner, as per the provisions of Section 135A of the Income Tax Act. It seeks to optimize the use of the Central Board of Direct Taxes (CBDT) department's resources and eliminate the interface between the income-tax authority and the assessee.

The scope of the e-Verification Scheme includes collecting information under Sections 133, 133B, 133C, and 135 of the Income Tax Act. It also covers inspecting the register of companies in a faceless manner, to the extent technologically feasible, under Section 134 of the Income Tax Act.

The Commissioner of Income-tax is responsible for collecting information from the assessee or taxpayer. The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) will make the information available to the Commissioner of Income-tax for further processing.

The procedure involves collecting information, initial e-verification, analyzing risk criteria, preliminary verification by the Prescribed Authority, and final verification. The verified information is then processed further, either made available to the Faceless Assessing Officer or Jurisdictional Assessing Officer, or utilized for necessary action under the Income Tax Act.

If a mismatch persists between the amount accepted by the assessee and the amount reported by the reporting entity after initial e-verification, the information is run through a risk management strategy laid down by the CBDT. Low-risk information is processed for closure, while the remaining information is transferred for further verification and action.

Taxpayers are notified about mismatches through SMS and emails. The mismatches related to the Financial Years 2021-22 and 2022-23 are detailed on the Compliance portal, and taxpayers can respond to the discrepancies through the e-verification portal.

The e-Verification Scheme, 2021 was notified by the Central Board of Direct Taxes on December 13, 2021. A pilot program for the scheme started in September 2022, and full implementation is scheduled for February 2024.

The risk management strategy laid down by the CBDT is used to analyze the information after initial e-verification. It helps identify low-risk mismatches, which can be processed for closure, and high-risk mismatches that require further verification and action.

The e-Verification Scheme, 2021 promotes transparency and accountability by eliminating the interface between the income-tax authority and the assessee. It utilizes a faceless approach for information collection and verification, reducing the potential for biases or irregularities.