The income tax department started a move to collect as much as it can into income tax filing scenario. In this contrast, many people got the notice from income tax department saying file income tax return or some discrepancies in income tax return or TDS return.
The number of notice sent to people rises suddenly. This is not because people stop filing income tax return or paying taxes. It is because income tax authorities have a big database and tracking system with which it can send notices to people.
PAN (Permanent account number)
plays a vital role as it must for almost all the financial transactions
and also give the chance to peep in your financial status. This not only
tracks how much you earn but also how much you spend.
The income tax department also has CASS (Computer-aided scrutiny system) which shows any discrepancy in income tax return filed.
There are the common reasons with which you can get an income tax notice -
PAN
Permanent account number (PAN) is must for high-value transactions.
People always want to escape from mentioning PAN in investment like
FDRs. TDS will be deducted at 20% instead of 10% if PAN number is not with the documents for investments.
In the case of incorrect PAN, there is a provision of penalty of Rs. 10 thousand. Also TDS will not be credited in your account and may be in other account.
Form 26AS
Form 26AS has the details any individual paid taxes during the financial year. It includes any TDS deducted with your PAN number.
You can easily check Form 26AS details from incometaxefiling.gov.in.
Some banks too are giving an option to check form 26AS with the net
banking facility.
If any TDS deducted with your PAN either by employer, banks or any
other, you must check the correct details of TDS paid against your PAN number. Any mismatch can lead a notice from income tax department.
Income and expenses mismatch
The entire financial institute fetches report of earning and expenses to
income tax department. Computer-enabled software CASS matches it with income tax return filed by the individual. Any mismatch will surely serve you a notice by the income tax department.
Financial institutes include banks, share broker,
registrar of properties, mutual fund houses etc. They all demands PAN
while doing high-value transactions and report it to the department.
Income tax return filing
Filing income tax return is mandatory whose gross income during the
financial year is above RS. 2 lakh. Gross income means before deducting
the allowance and investment value such as tax savings, home loan,
education loan etc. There is a provision of penalty up to 300 percent
of outstanding tax.
File income tax return or serve yourself a notice from the income tax department.
File income tax return on time
Timely filing of income tax return also is a good way to escape with the notice from the department. You can file income tax return at the end of assessment year. You can file income tax return of 2012-13 on 31 March 2014.
Any late in filing income tax return may carry problems like you cannot carry forward your losses if income tax file after due date. Also there is no provision of revised income tax return after deadline. There is also a provision of penalty of Rs. 5000 in late filing of income tax return.
Declare previous employer’s income
Now income tax department has full data of your previous employer income
with CASS help as well as if the previous employer deducts any TDS on
your income, Form 26AS will immediately show against your PAN card. So
show the previous employer income in your income tax return or you will serve a notice plus 300 percent penalty on tax evaded.
Misuse of Form 15G and 15H
Form 15G and 15H are the declaration that the income is less than
exempted limit; hence no TDS should be deducted. People use it for
saving TDS liability and give it to financial authorities. But now you
need to mention PAN number for submitting form 15G and 15H. If any wrong
declaration is made, income tax department can easily catch it and
serve you a notice.
Declare interest on bank account and savings
Interest earned on fixed deposit, saving account, recurring deposit, bond interest is taxable and you must mention it on income tax return. Interest earned on saving account up to Rs. 10000 is tax free but it must be mentioned in income tax return. Interest on post office saving is tax exempted up to Rs. 3500 for individual and Rs. 7000 for joint account holder.
Respond income tax intimation or notice
One must respond to any intimation or notice from income tax department.
There may be some mistake from the department too but ignoring them may
be very painful as income tax department may treat you in default and
can take final step. So respond timely.
Source: www.taxalertindia.com
