A taxpayer can receive a notice/query from the ITD regarding their commodity transactions. Thus, taxpayers who receive an SMS or any communication via call or email from ITD are likely to face some verification issues in their ITRs. Hence, taxpayers can receive the SMS for three reasons:
- Not filed ITR or even if the ITR is not filed in an AY where there is a potential tax liability pending.
- Details provided by the taxpayer and information received by the ITD don’t match for that particular assessment year.
- Significant transactions get reported to the Income Tax department during a financial year which is considered abnormal or out of line with the profile of the taxpayer.
Commodity transactions are similar to Securities transactions. Transactions that get settled in an alternate method than by actual agreed upon delivery are treated as Speculative transactions. Speculative transactions are exempted from tax. however, some Speculative transactions an eligible in respect of trading in commodity derivatives carried out in a recognized association, which is chargeable to commodities transaction tax is not considered a speculative transaction.
Business Income u/s 28 to 43C and Income from capital gains u/s 45 to 55A can be levied on commodity transactions.
Taxpayers who have received any such verification issue needs to submit a response on those issues raised. Additionally, this response has to be submitted online by logging into the compliance portal.
Verification issue in the computation of Commodity transactions’ tax liability
| Code | Description | Response |
| A1 | Total receipts as per taxpayer pertaining to the above information | Amount |
| A2 | Less: Amount relating to another year/PAN | PAN year-wise list |
| A3 | Less: Amount covered in other information | Amount |
| A4 | Less: Exemption/Deduction/Expenditure/ Set off of Loss | Exemption/Deduction wise list |
| A5 | Income/Gains/Loss (A1-A2-A3-A4) | Computed |
A1- Total receipts:
The gross value of transactions in commodities should certainly be included and a final amount needs to be mentioned.
A2- Amount relating to other year or PAN:
If part of the receipts relates to someone else’s PAN or is considered for some other year then the List of details of such receipts are to be mentioned as per the table below:
A3- Amount repeatedly covered:
If any amount is mistakenly covered twice then it should be mentioned under the Remarks section of the previous table. Hence, this will nullify the repeated Income/Gains/Loss covered.
A4- Exemption/Deduction/Expenditure/Set off of loss:
This section has to include gross salary and a list of all the available allowances which are exempt. Therefore, the taxpayer needs to select the correct category from the drop-down list as under:
- Cost of acquisition u/s 48.
- Expenditure incurred wholly and exclusively in connection with transfer u/s 48.
- Deductions from capital gains u/s 54EC/54EE/54F.
- Set off of Loss.
- Others.
The details are to be submitted as per the table mentioned below:
A5- Income/Gain/Loss:
This section includes the self-computation of commodity transactions chargeable to tax A5=(A1-(A2+A3+A4)). If your income computation exceeds the minimum of 2.5 lakh then you should file your ITR.
FAQs
If there are any e-Verification issues it will certainly be pushed to the compliance portal for e-verification. Additionally, Email and SMS will be sent to the taxpayer informing about the issue raised. Then, the taxpayers need to respond to those issues raised.
Yes, it is certainly advisable to log in to the compliance portal. However, if a taxpayer doesn’t login he/she will not be able to respond to the issues raised.
Upon examining the online response submitted by the taxpayer, ITD can raise an additional query request to seek further information/clarification from the taxpayer. And thereafter, the taxpayer needs to respond to the additional query request as well.