Expenditure (NEX01)

Verification Issue

Whether the taxpayer is liable to file return of income on account of expenditure incurred.

Overview

Expenditure on family functions, foreign travel, and foreign education, expensive hotels/restaurants
etc. are some of the areas where income is likely to be used. Quoting of PAN has been made mandatory
in certain types of transactions. Transactions of certain types above a threshold value are required to
be reported through AIR or SFT. Any unexplained expenditure can be brought to tax as deemed to be
income of the assesse for the relevant financial year under section 69C.

Expenditure often reveals the true life style of a person e.g. if an expenditure of a few Lakhs is made
in a hotel or a similar expenditure is made on a foreign visit, it reflects the standard of living of the
taxpayer.

Information Source

The related information source and key fields are as under:

 SFT-006 - Payments made by any person in respect of one or more credit cards issued to that
person, in a financial year.
 SFT-011 –Purchase of foreign currency.
Note:

 The “Information Source” field displays the name and PAN/TAN of the filer.
 The “Value” field displays the amount paid.
 The ‘Information status’ field displays if the taxpayer has /has not submitted the response.

Submission of Response

The response has to be provided in following format (Refer Response category – Source of funds):

Code Description Response Remarks

A1 Correct Information Value <Amount> + Remarks Refer Note 1 & 2.

A2 Out of earlier income or savings <Amount> + Remarks Refer Note 3 & 4

A3 Out of receipts exempt from tax <Exempt income wise Refer Note 5
list>
 A4 Received from identifiable persons <PAN wise list> Refer Note 6
(with PAN)

A5 Received from identifiable persons <Person wise list> Refer Note 7

(without PAN)

A6 Received from un-identifiable <Nature of transaction Refer Note 8

persons wise list>

A7 Others <Amount> + Remarks Refer Note 9

A8 Unexplained Amount A1 – Refer Note 10

(A2+A3+A4+A5+A6+A7)

Guidance for Submission of Response

The guidance for submission of response is as under:

1. Correct Information Value (A1) Enter here the complete amount of expenditure incurred in
the transaction.
2. If the taxpayer has not made any expenditure as above or a different amount has been paid,
correct information value related to above information (A1) may be shown as 0 or a different
value may be given. Suitable remarks may be provided in the remarks text box.
3. If the amount is claimed to be from more than one category, the source of amount may be
assigned under various categories in the following sequence:
4. Out of earlier income or savings (A2) if any part of the expenditure has been made out of
earlier income or savings, mention the amount here. Suitable remarks may be provided in the
remarks text box.
5. Out of receipts exempt from tax (A3) Value may be provided after selecting the applicable
Exempt income type from the following drop down list:-
o Exempt interest income u/s 10.
o Exempt dividend income u/s 10(34)
o Exempt long-term capital gains on shares u/s 10(38).
o Agricultural income u/s 10(1).
o Share in total income of firm/AOP etc. u/s 10(2A)
o Income not taxable in India.
o Others.
If this field is selected, the following row is displayed:-

Exempt Income Type Amount Remarks

 More rows can be added by clicking on the button ‘Add Row’. Suitable remarks may be
provided in the remarks text box.

6. Received from identifiable persons (with PAN) (A4) If any amount has been received from
identifiable persons who are having PANs, the details of the same may be given here. If this
field is selected, the following row is displayed:
PAN of Name of Financial Transaction Transaction
Amount Remarks
Person Person Year Type Mode

The values shown in drop down for the Transaction Type are:-
o Sales
o Loan Received
o Loan Repayment
o Gift Received
o Donation Received
o Other Receipt.
The values of Transaction Mode are ‘Cash’ and ‘Non-cash’. More rows can be added by clicking
on the button ‘Add Row’. Suitable remarks may be provided in the remarks text box.
7. Received from identifiable persons (without PAN) (A5) If any amount has been received from
identifiable persons who are not having PANs, the details of the same may be given here. If this
field is selected, the following row is displayed:-
Address Financial
Name of Pin Transaction Transaction
of Year Amount Remarks
Person code Type Mode
Person

The values of Transaction Type and Transaction Mode are same as in Note 6. More rows can be
added by clicking on the button ‘Add Row’. Suitable remarks may be provided in the remarks
text box.
8. Received from un-identifiable persons (A6) If any amount has been received from un-
identifiable persons, the details of the same may be given here. If this field is selected, the
following row is displayed:-
Financial Year Transaction Type Transaction Mode Amount Remarks

The values of Transaction Type and Transaction Mode are same as in Note 6. More rows can be
added by clicking on the button ‘Add Row’. Suitable remarks may be provided in the remarks
text box.
9. Others (A7) if there is any amount which is not covered in any of the above categories, for
example, if any amount was declared in Income Disclosure Scheme, 2016, such amount may be
mentioned here. Suitable remarks may be provided in the remarks text box.
10. Unexplained Amount (A8) is a computed figure (A1 – (A2+A3+A4+A5+A6+A7)). This figure
represents amount for which no explanation has been provided.