The mention of a notice form the Income Tax Department delivers a cold sensation down the spine of almost all taxpayers. The reasons for getting an Income Tax notice can be many and even submitting ITR on time does not guarantee that a notice won’t be sent to you.
However, one can usually avid Income Tax Department notices by reporting all sources of income, taking care of TDS, filing ITR on time. If anyone has any difficulty, it is advisable to take professional help. Know the different situations under which the Income Tax Department can send you a notice.
Error in TDS
The Income Tax Department can send you a notice if there is an error with the TDS. If the TDS shown in your ITR and the actual TDS on Traces website do not match, you might get a notice. Experts suggest that your employer (or any person) deducting TDS on income to deposit the requisite amount the government and file TDS return in proper time. Also, one should reconcile actual TDS with the Tax Credit Statement (Form 26AS).
Not disclosing ‘Other Income’
Taxpayers are bound to report all the sources of income in any year. If you keep out income from rentals, or interest income from savings accounts, fixed deposits (FDs) and recurring deposits (RDs), you can get IT notices. It is very common that the bank deducts TDS on FDs at 10% but you belong to a higher tax slab. The income has to be shown and the rest of the tax should be paid. The banker will give you an interest statement of all deposits in the bank and you should include it while filing ITR. The penalty for hiding income can be as high as 3 times the tax payable.
Defects in Income Tax Return (ITR)
If you file taxes in the incorrect income tax filing form or skip necessary information, you might get a tax notice, even if the error is committed out of genuine ignorance and not due to any malafide intention. The IT Department can issue a notice under Section 139(9), while will require you to file a revised return after rectifying the mistake.
Not filing Income Tax Return (ITR)
If you are a person whose gross income is above the exempted limit (Rs 2.5 lakh for those below 60) you have to file annual Income tax return by the due date. If you fail to do so, an IT notice might be on its way. Also remember that if you are a resident Indian and if you are the owner of an asset located abroad or if you happen to be the signing authority in a bank located abroad, you have to file ITR, no matter what your income is. If your company/employer has deducted TDS from your compensation, you have to file ITR.
Unnatural, high value transaction
If you have conducted any transaction which is far higher when compared with your reported sources of income, you can get a notice from the Income Tax Department. One should remember that these transactions are directly conveyed to the Income Tax Department through annual information returns sent by bank, brokers etc. Every transaction should be reported.
One of the things that all taxpayers dread is a notice from the Income Tax department. A disquieting fact is that you could have filed your Income Tax Return (ITR) on time but that is no guarantee that you won’t an Income Tax notice. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
