CBDT’s e-Verification Scheme

The Central Board of Direct Tax (CBDT) has implemented a new e-Verification Scheme, 2021 to enhance voluntary tax compliance and make the tax administration more transparent and non-intrusive. The following article discusses the e-Verification Scheme in detail and its significance for taxpayers.

What is the e-Verification Scheme?

The e-Verification Scheme is an electronic system that enables the tax department to verify financial transaction information with taxpayers, particularly if it appears to be underreported or unreported in their income tax returns. The scheme harnesses information technology to make the tax administration more transparent, efficient, and non-intrusive.

How does the e-Verification Scheme work?

The entire process of e-verification is digital, with notices and responses submitted electronically, resulting in a verification report without any physical interface with the taxpayer. Under the scheme, the tax department can issue notices to taxpayers for verification of their financial transactions. The taxpayers can then respond to these notices online through the e-filing portal. If the taxpayer’s response is found to be satisfactory, the verification process is closed. However, if the response is found to be unsatisfactory, further inquiry may be conducted.

What are the benefits of the e-Verification Scheme?

The e-Verification Scheme offers several benefits to taxpayers and the tax administration. Some of the key benefits are as follows:

• Increased transparency: The scheme promotes transparency in tax administration by making the verification process digital and non-intrusive.
• Faster resolution: The e-Verification Scheme enables faster resolution of cases, as the entire process is digital and requires no physical interface with the taxpayer.
• Reduced compliance burden: The scheme reduces the compliance burden on taxpayers by allowing them to respond to verification notices online through the e-filing portal.
• Enhanced voluntary compliance: The e-Verification Scheme encourages voluntary compliance by enabling the tax department to verify financial transaction information and detect underreported or unreported income.

What is the status of the e-Verification Scheme?

The e-Verification Scheme has completed over 35,000 cases out of 68,000 cases in a pilot study. The scheme has been well-received by taxpayers and has resulted in increased voluntary compliance. The CBDT is planning to expand the scope of the scheme in the coming years to cover more taxpayers and financial transactions.