Simplified Laws Guide to Taxation and Legal Concern There are two things, digital assets and physical assets managed digitally. I am referring to the second one here.
Not too long ago, updating passbooks at banks meant visiting the branch, waiting in queues, and getting entries made manually. If the bank or service provider required any documents, they would send letters by post or SMS requests for information.
As digitalization evolved, instead of the old system, we are flooded with numerous messages, and emails from the service providers.
Just before writing this, I got a message. In fact, the triggering point for this piece of document is a message that reads as “As per RBI directions, we need to add another safety clause to your locker….. request you to visit the …. Bank Branch… Your safety is our top priority. Kindly ignore if already submitted.”
The last line of the message can be quite frustrating, as many of us can relate to. It raises the question: Can’t they develop software that sends messages only to those who have not complied? According to my software-savvy friends, it’s a relatively simple program to write, sparing countless customers from uncertainty about whether they’ve already taken the necessary action.
As most financial transactions have gone digital today, it’s crucial to keep a watchful eye on all your accounts. Just as you wouldn’t leave a farm or house unattended for an extended period without maintenance, you shouldn’t neglect your digital accounts either.
Do you have bank accounts, demat accounts, income tax accounts, BESCOM accounts, and more? If so, make it a practice to log in to these accounts at least once every six months. Set up alarms in your Google Calendar to remind you.
For instance, with bank and demat accounts, there are periodic updates your banker expects you to complete. These may include updating nominee details, KYC, re-KYC, FATCA declarations, and more. Additionally, it’s important to make regular transactions in these accounts, regardless of the transaction amount, to prevent them from being flagged as non-operative.
When it comes to your Income Tax account, there are issues such as notices, pending outstanding demands, AIS information, refund failed notifications, bank validations, bank re-validations, Aadhar linking, and more. By logging in and checking your dashboard, proceedings, etc., you’ll stay informed about what the tax department has flagged.
A word of caution for NRIs/OCIs: Neglecting to monitor your IT portal can lead to serious consequences. Consider the case of Mr. Arun, who reached out to me recently. He went to the USA in 2011 and didn’t check the IT portal until 2023. To his shock, he found several notices from the IT department related to FY 2014-15 and a tax demand of Rs. 54,00,000. As he hadn’t responded to the notices, an investment he made in property in 2014 was considered unexplained, and taxes were levied. Now, he has no choice but to spend lakhs of rupees on a legal battle. So, it’s essential to regularly check your IT portal to avoid a rude awakening like Arun’s.
The bottom line is fairly simple. Regular login and monitoring of all your digital assets, including bank accounts, demat accounts, EPF, PPF, Income Tax, and bank lockers, are a necessary evil. Even though the process can be cumbersome, doing it once every six months is a small effort compared to the potential consequences of neglecting your digital assets. Your financial security depends on it.
