LEI No. reporting in ITR explained in detail

LEI Reporting in ITR Explained in Detail
Income tax department has recently come up with an important addition in reporting requirements to Income Tax returns from AY 2024-25 in certain cases. This recent development has come after a notification was issued by RBI (Reserve Bank of India). This update is with respect to reporting of LEI (Legal Entity Identifier) Number in ITRs. This is a 20-digit alpha-numeric code uniquely identifying parties involved in financial transactions across the world. LEI is aimed at establishing a standardised global reference data system to ensure that every entity involved in a financial transaction is duly and uniquely identified. It has been implemented to improve the quality and accuracy of financial data reporting systems for better risk management. 

Applicability of LEI Number:
The Reserve Bank of India (RBI) has mandated Legal Entity Identifier (LEI) numbers for entities undertaking certain financial transactions. 

LEI no. is applicable, where either or both parties are non-individual/s.

As per RBI Notification, all single payment transactions of ₹50 crore and above undertaken by entities (non-individuals) should include remitter and beneficiary LEI information. This is applicable to transactions undertaken through the NEFT and RTGS payment systems.

Income tax department has also mandated this reporting requirement by stating, “According to the RBI Notification, in the case of non-individuals, a Legal Entity Identifier (LEI) No. is required for Credit of Refunds of Rs. 50 crore and above*. For hassle-free refund processing, please submit LEI details on the Income Tax portal in Login->Dashboard->Services->LEI.”

What does Income Tax Department have to say about LEI:
It is important for non-individual taxpayers, seeking income tax refund of Rs.50 crores or more to comply with the LEI reporting requirements. Non-compliance with the LEI requirement may lead to penalties or interruptions in the refund process.

This reporting requirement is to be disclosed in the disclosures of ITR 2,3,5,6 and 7.

You may enter LEI details in your ITR using TaxBase software as shown below:

• Open assessee file in TaxBase
• Go to General Information Tab in the software
• Enter details in the space provided for LEI reporting

Conclusion:
In the world of financial transactions and digital payments, streamlining the entire reporting process is an important aspect. To make this happen, income tax department has mandated the reporting of LEI number in income tax returns where refund amounts are either Rs.50Crores or more. This is applicable to non-individual taxpayers only. This is applicable to transactions undertaken through the NEFT and RTGS payment systems. This requirement brought by Income tax department is done to align the financial transaction transparency with notification issued by RBI where the LEI number is mandatorily to be taken when a single payment transaction is done in excess of Rs.50 crores by Non-individual business entities.

About Author:
CA Chinmay Shirish Agate
Chinmay Agate is a Practicing Chartered Accountant having 4+ years of experience and expertise in the field of Direct Taxation and Auditing compliances. In the past, he worked in various CA firms and comes with wide industry experience from services, retail to manufacturing to trading where he has handled various complex assignments. He has keen interest in Forex and Derivative knowledge as well as fundamental analysis.