Notices received from the Income Tax Department
are rarely pleasant. It may not always be bad news, sometimes the I-T
department also sends refunds through notices that’s why you should carefully
go through the notice and should understand what it is about.
Whatever may be the reason behind the notice,
you should respond to it as quickly as you can, if someone ignores the income
tax notice then the department may impose a fine of Rs 10,000.
The following are the most common income tax
notices and how you can avoid receiving them:
1.
Reminder to file tax returns
Sometime you have not file your Income Tax Return and the IT
Department often sends out reminders to those who haven’t filed their income
tax returns. These reminders can be sent out for 6 previous years by the
department. There is a penalty of up to Rs 5,000 that the department can levy
in case of delay in filing returns. If you receive such a reminder, file your
returns immediately. It may be possible that you may not be required to file
returns by law, which you should intimate the tax department.
2.
Discrepancy in your tax returns
You might get a tax notice if there is a problem with the returns
that you have filed. It is possible that you may have forgotten to declare some
income, you may have claimed a deduction under the wrong section or the
information provided by you is incomplete. In such situations, you should
review the notice and your returns and rectify the error.
3.
Error in TDS amount
There is often a mismatch in the tax deducted at source (TDS)
amounts in income tax returns. It is possible that your employer or another
deductor may have delayed filing their TDS returns or filed incorrect returns.
In such a case, you should ask your employer or deductor to review the TDS
amount credited to you.
4.
Review of documentations
When you file your tax returns, you don’t need to attach any
documents. The Income-Tax Department expects you to furnish the correct
information in good faith. However, the department may ask to review some
documents on the basis of which you have filed your returns. In such cases, you
should immediately submit the documents that have been called for.
5.
Non-disclosure of assets
Taxpayers are required to pay wealth tax on assets that they own
that are worth more than Rs 30 lakh. The wealth tax is at the rate of 1% on the
value that is above the Rs 30 lakh limit. These assets need to be disclosed and
taxes on them need to be paid as well. Not doing so can lead to a notice from
the department.
6.
Reporting of high-value transactions
There are certain high-value transactions like credit card
purchases exceeding Rs 2 lakh, mutual fund investments of more than Rs 2 lakh,
cash deposits in a bank of more than Rs 10 lakh, sale or purchase of property
of more than Rs 30 lakh, etc that need to be reported to the Income-Tax
Department.
7.
Investments in the name of family
members
Taxpayers often purchase assets or make investments in the name of
their family members--spouse, children, siblings or parents. This is done to
evade taxes, but any income from such investments attracts taxes in your name.
This income should be declared at the time of filing your returns or you may
end up garnering the attention of the tax department. In case of such a notice,
you should declare the income and rectify the error.
8.
Scrutiny at random
The Income Tax Department has
started to randomly scrutinise returns to enforce tax compliance. If you
receive such a notice, check the validity and respond to it accordingly in the
time allotted.
Source: www.Yahoo.com
