Receiving a tax notice can be a nightmare for many tax payers, especially those who have failed to file their tax, adding interest income.
The Income Tax department issued 7 lakh letters targeting individuals who have made high-value transactions without quoting PAN. Transactions include cash deposits, sale or purchase of immovable property valued more than Rs 30 Lakh.
Here is a list of reasons which could land up with an IT notice:
Not filing income tax
Any individual who has income more than Rs 2,50,000 should file their returns before mentioned time. Note that the individual has to file tax even TDS has been deducted by the bank or employer.
Individuals who have failed to file their tax in past few years with taxable income could get intimation from Income tax department.
It is better to file tax even if there is no taxable income as it is necessary when you apply for a loan or for a visa.
If there is any TDS mismatch from the amount deducted and amount deposited, you can receive a notice from tax department regarding the same.
Before filing tax returns, a tax payer should check Form 26AS as all the TDS details will be mentioned in the form.
Discrepancy in Return
If there is a discrepancy in your return, you may receive a tax notice from the department informing the same.
- Discrepancy may arise when:
- Some incomes, like Interest from FDs, are not declared.
- Claiming a deduction under the wrong section.
- Information provided is not complete.
Defective income tax return
Income tax department will send you defective return intimation if there is any error in your income tax return. A return is considered as defective on account of incomplete or inconsistent information in the return or in the schedules or for any other reason.
Investment in the name of family
Many investors buy assets in the name of family members- spouse, children, parents and fail to declare income from such investments.
Income received from such investments should be mentioned when filing tax returns or it may attract the attention of tax department.
Any high-value transactions and cash receipts beyond a certain limit will be reported to Income tax department as per the rule.
The transaction includes cash receipts or withdrawal, purchase of shares, immovable property, term deposits, mutual funds and sale of foreign currency.
At times Income Tax department may ask you to submit certain documents relating to your tax filed. If you have claimed high tax return from your investments, there are chances that the Income tax department may ask you for documents, proof of investments.