Why People Receive IT Notices and How to Avoid Them
IT is pretty active nowadays, and notices have become a common feature. This article by a leading tax portal provides good information on why people receive IT notices and how to ensure that we do things the proper way to avoid getting notices.
1. Due to TDS
You may receive a notice from the department if there is any mismatch in the amount of TDS you have shown in your return and the actual TDS that has been deducted during the year. For example, if your employer forgot to file the TDS return, but the same amount is shown in your income tax return, then a mismatch situation arises. While filing your return, always ensure that the amount in Form 26-AS matches the amount you show in your return.
2. Mismatch of Information in the Return Filed by You
If you make a mistake while filing your income tax return, be prepared for a notice. Mistakes can vary from filing incomplete information, claiming deductions under the wrong section, or completely ignoring any specific income.
3. Random Scrutiny
The IT Department selects many returns randomly for scrutiny while processing the returns. Upon receiving these scrutiny notices, don’t panic. Read the notice thoroughly and do the needful within the time stipulated in the notice.
4. Ignoring Income Received from the Previous Employer
If you think you can smartly deceive the IT Department by not mentioning the income received from a previous employer, you are mistaken. The IT Department can easily find it out from your Form 26-AS, as it contains all the details of TDS deducted by your employer during the year. Instead of indulging in these practices, save your taxes through smart tax planning.
5. Not Depositing the Full Amount of Tax Assessed Before the Due Date
You will receive a notice from the IT Department if you do not pay the full amount of tax payable before the due date specified by the IT Department. For example, if your tax liability is Rs. 20,000 and you only pay Rs. 16,000 by the due date, be prepared to tackle a notice.
6. Income Tax Return Not Filed or Filed After the Due Date
You can receive a notice from the IT Department for not filing a return if you haven’t filed your return yet. The follow-up task is simple: check if you are required by law to file the return. If yes, then just file your return, and your problem is solved, although you might have to pay a penalty and interest at the rate of 1% per month.
7. High-Value Transactions
For all high-value transactions you enter into with some entity or individuals, you increase your chances of receiving a notice from the IT Department. The following transactions can be classified as high-value transactions:
- Cash deposits in a bank aggregating to Rs. 10 lacs or more.
- Payment via credit card of Rs. 2 lacs or more.
- Investment in mutual funds of Rs. 2 lacs or more.
- Investment in debentures or bonds in a company of Rs. 5 lacs or more.
- Investment in shares of a company of Rs. 1 lac or more.
- Purchasing jewelry of Rs. 2 lacs or more.
Always ensure that you provide your PAN number while entering into such transactions to safeguard yourself.
Income Tax Department Advises: Say No to Cash Transactions
DO NOT ACCEPT cash of Rs. 2,00,000/- or more in aggregate from a single person in a day or for one or more transactions relating to one event or occasion. DO NOT RECEIVE OR REPAY Rs. 20,000/- or more in cash for the transfer of immovable property. DO NOT PAY more than Rs. 10,000/- in cash relating to business/profession expenditure. DO NOT DONATE in excess of Rs. 2,000/- in cash to a registered trust/political party. Contravention may result in the levy of tax/penalty. Go Cashless. Go Clean.
From India, Pune
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3180IT is pretty active nowadays, and notices have become a common feature. This article by a leading tax portal provides good information on why people receive IT notices and how to ensure that we do things the proper way to avoid getting notices.
1. Due to TDS
You may receive a notice from the department if there is any mismatch in the amount of TDS you have shown in your return and the actual TDS that has been deducted during the year. For example, if your employer forgot to file the TDS return, but the same amount is shown in your income tax return, then a mismatch situation arises. While filing your return, always ensure that the amount in Form 26-AS matches the amount you show in your return.
2. Mismatch of Information in the Return Filed by You
If you make a mistake while filing your income tax return, be prepared for a notice. Mistakes can vary from filing incomplete information, claiming deductions under the wrong section, or completely ignoring any specific income.
3. Random Scrutiny
The IT Department selects many returns randomly for scrutiny while processing the returns. Upon receiving these scrutiny notices, don’t panic. Read the notice thoroughly and do the needful within the time stipulated in the notice.
4. Ignoring Income Received from the Previous Employer
If you think you can smartly deceive the IT Department by not mentioning the income received from a previous employer, you are mistaken. The IT Department can easily find it out from your Form 26-AS, as it contains all the details of TDS deducted by your employer during the year. Instead of indulging in these practices, save your taxes through smart tax planning.
5. Not Depositing the Full Amount of Tax Assessed Before the Due Date
You will receive a notice from the IT Department if you do not pay the full amount of tax payable before the due date specified by the IT Department. For example, if your tax liability is Rs. 20,000 and you only pay Rs. 16,000 by the due date, be prepared to tackle a notice.
6. Income Tax Return Not Filed or Filed After the Due Date
You can receive a notice from the IT Department for not filing a return if you haven’t filed your return yet. The follow-up task is simple: check if you are required by law to file the return. If yes, then just file your return, and your problem is solved, although you might have to pay a penalty and interest at the rate of 1% per month.
7. High-Value Transactions
For all high-value transactions you enter into with some entity or individuals, you increase your chances of receiving a notice from the IT Department. The following transactions can be classified as high-value transactions:
- Cash deposits in a bank aggregating to Rs. 10 lacs or more.
- Payment via credit card of Rs. 2 lacs or more.
- Investment in mutual funds of Rs. 2 lacs or more.
- Investment in debentures or bonds in a company of Rs. 5 lacs or more.
- Investment in shares of a company of Rs. 1 lac or more.
- Purchasing jewelry of Rs. 2 lacs or more.
Always ensure that you provide your PAN number while entering into such transactions to safeguard yourself.
Income Tax Department Advises: Say No to Cash Transactions
DO NOT ACCEPT cash of Rs. 2,00,000/- or more in aggregate from a single person in a day or for one or more transactions relating to one event or occasion. DO NOT RECEIVE OR REPAY Rs. 20,000/- or more in cash for the transfer of immovable property. DO NOT PAY more than Rs. 10,000/- in cash relating to business/profession expenditure. DO NOT DONATE in excess of Rs. 2,000/- in cash to a registered trust/political party. Contravention may result in the levy of tax/penalty. Go Cashless. Go Clean.
From India, Pune
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Circular No 1-2018 Processing of income-tax returns under section 143(1) of the Income-tax Act .pdf
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