8 Common Reasons For Why You Get Income Tax Notices!

  • Due to TDS.

You may be slapped with a notice by the department if there is any mismatch in the amount of TDS which you have shown in your return and the actual TDS that has been deducted during the year. For example, In case, your employer forgot to file TDS return but the same amount is shown in your income tax return then there arises a situation of mismatch.

While filing your return always make sure that the amount in form 26-AS matches with the amount you show in your return.

 

  • Mismatch of information in the return filed by you.

If you make a mistake while filing your income tax return then be prepared for a notice. Mistakes can vary from filing incomplete information, claiming deduction under the wrong section or missing out on any specific income ignored completely.

 

  • Random Scrutiny.

The IT Department selects many returns randomly for scrutiny while processing the returns. Upon receiving these scrutiny notices, don’t panic and read the notice thoroughly and do the needful within the time stipulated in the notice.

 

  • Ignoring income received from the previous employer.

In case you’re wondering that you can smartly deceive IT Department by not mentioning the income received from the previous employer, then you’re wrong. 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.

So don’t think of indulging in these types of practices instead save your taxes by smart tax planning.

 

  • Not depositing the full amount of tax assessed before the due date.

You’ll be served with a notice by 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 of Rs. 20,000 and you only pay Rs. 16,000 by the due date then be prepared to tackle a notice.

 

 

  • Income Tax Return not filed or filed after the due date.

You can receive a notice from IT Department for not filing a return if you haven’t filed your return yet. The follow-up task is very simple, just check if you’re required by law to file the return, if yes then just file your return and your problem is solved but you might have to pay penalty and interest at the rate 1% per month.

 

  • High-Value Transactions.

For all the high-value transactions that you enter into with some entity or individuals, you higher your chances of getting a notice from IT Department. Following transactions can be classified as high-value transactions:

  • Cash deposits in 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 debenture 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 make sure that you provide your PAN number while entering into such transactions to safeguard yourself.

 

  • Transferring the asset in the name of spouse or children.

This is the most common tactic by which people think they can evade taxes. Ronit thinks that by transferring the building to his wife’s name, he won’t have to show the rent received from it. But according to Income Tax even after transferring the asset, its income will be his deemed income. If he doesn’t show this income in his return, he might get a notice from the department.

Still unsure on why you have been served with a notice and having problem tackling it?

Don’t worry, Tax2Win is always here to guide you and make your life easier by resolving 

all your tax queries.

 

Still unsure on why you have been served with a notice and having problem tackling it?

Don’t worry, Tax2Win is always here to guide you and make your life easier by resolving 

all your tax queries.

Abhishek Soni

By Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.

2 comments

  1. Dear Sir,

    I have a 2 query regarding FORM 16.

    1. For one employee, We have not deducted the tax from Apr – Oct’17. But, Nov month Tax is 13033. Employee is telling that don’t deduct the tax(nullify) , she will pay advance tax. Then, How to show in FORM 16?. Whether can i nullify the no month tax ? and Tax due will come in FORM 16 right?

    2. For another employee, We have not deducted the tax from Apr – Oct’17. But, Nov’ month tax is 47000. She has paid 60000 advance tax. whether need to nullify tax in november month? or need to consider?
    and we can not show the advance tax in FORM 16. but, Tax due will come right?..Plz explain

    1. Dear Sir,

      We appreciate your query. Thanks for writing to us.

      Query 1 Reply:

      As per Income-Tax Act, it is the responsibility of the employer to deduct the tax at source (TDS) at the time of payment of salary to employees every month. The employer is required to deduct the TDS on salary at the average rate of income-tax and deposit the same with the government within the prescribed time. Failure to deduct the TDS or delay in the deduction of TDS leads to levy of interest and penalty by the tax authorities.Therefore, payment of advance tax instead of TDS is not advisable. Further, for customized opinion and safe tax planning, you can connect with us at s[email protected] or at +09660996655.

      Query 2 Reply:

      As explained above, deduction of TDS is the responsibility of employer and failure to deduct and deposit the same leads to interest and penalty consequences.Therefore, payment of advance tax instead of TDS is not advisable. We suggest to start deducting the TDS from the next coming month so as to avoid further interest and penalty consequences. Now, in your case, the employee has already paid the advance tax so do consider the advance tax at the time of calculation of yearly tax liability and also consider any other income of the employee, if any for the purpose of calculation of TDS liability. For customized opinion and safe tax planning, you can connect with us at [email protected] or at +09660996655.

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