As the income tax return (ITR) filing season is ongoing, taxpayers should be mindful of the risks and precautions associated with sharing sensitive financial information. Many individuals hire chartered accountants (CAs) to assist with the filing of their ITRs, often sharing their income tax e-filing portal password and PAN number. However one should be mindful of the potential risks of your sensitive data being leaked, leaving individuals vulnerable to exploitation.
Further, the Income Tax Department has issued a series of cautionary measures. "Never Respond to unsolicited messages or calls from strangers promising Refund(s). Never Trust unverified sources claiming to be from the Income Tax Department. Never Share personal details such as OTP, Bank Account, PAN & Aadhaar details. Never Click on unverified links claiming to be linked to the Income Tax Department. e-Pay your Income Tax only through official website(s)," I-T Department took to X platform on July 17, 2024, asking taxpayers to report such instances to: https://incometaxindiacjov.in/Pages/report-phishing.aspx.
Precautions To Take When Entrusting CAs & Other Third Parties
Says CA Reetu Bhandari founder of tax & compliance platform TAXVIC, "Make sure you get in touch with a CA through referrals or if you have found a CA online, do talk to a few CA's before you decide who you should go for."
"Before sharing confidential data, such as documents for property purchase or sale, bank statements, etc., it's important to obtain an engagement letter from the service provider, outlining points of data confidentiality. While Chartered Accountants (CAs) are bound by ethical standards that prioritise client data confidentiality, it's still a good practice to have such agreements signed for safety purposes. This is especially important when you've connected with a CA directly online, rather than through a referral."
Finding The Right CA: "Additionally you must ask for the profile, and membership details of any CA to cross-check (when it is not a referral case). ICAI website provides functions for you to cross-check a CA detail online," Bhandari says. If they are CAs, check their registration and membership with the Institute of Chartered Accountants of India (ICAI).
Ensuring Data Security: Further, taxpayers should inquire about the data security measures, communication modes and data encryption measures to ensure the secure storage and protection of their personal and financial information.
Keep Copies & Verify Before Filing: Always keep copies of your financial documents with yourself if you are giving original income statements, Form 16, investment proofs, etc., to your CAs and try to give physical copies in person to avoid data breach from your end. Demand the draft copy of your tax return and examine it thoroughly before CA files it. Address any discrepancies with your CA or other third-party filer.
Further, for those who don't want to share e-filing ITR portal passwords with CAs, E-Return Intermediaries (ERIs) are another alternative. There are around 50 ERIs, recognized by the Income Tax Department, listed here
They complete the entire ITR filing process after collecting the necessary documents from the assessee. Depending on the type of ERIs, they may provide tax planning services and offer tools for taxpayers to prepare and file ITRs.
