5 Reasons you may get a notice from the income tax department of India
You may get distressed if you get a show-cause notice from the income tax department of India. You can get an Income tax notice for many reasons. These could include non-filing of return under income tax on the time allotted, estimation errors, not provided detailed income accurately, or even declaring excessive losses. Mithlesh Sharma, Senior Partner, SetyourBiz Corporate Consultants LLP said, “Taxpayers, in common, are issued notices of income tax under Section 139(9), 143(1), 143(2), 143(3), 245, 144, 147 and 148 of Income Tax Act, 1961 regarding non-filing of Income-tax return, secretion of taxable income, claiming a not genuine tax refund, calculating excessive income tax losses, long term capital gains (LTCG), scrutiny, etc.”
Here are TEN ordinary reasons taxpayers can get a notice from the income tax department of India and how they can keep away them.
1. For delay filing Income tax return
If anyone has not filed your income tax return by the last date issued , you will receive a reminder notice as soft notice from the IT department. You get this reminder notice before the end of year in which income is calculated for which the filing of return is due. Mithlesh Sharma, Partner, SetyourBiz Corporate Consultants llp said that filing Income tax return where the individual has income taxable is compulsory under section 139(1). The reminders for non-filing by the last date are generally automated reminders which point l out the requirement under section 139(1) and notice to taxpayers to file their Income tax returns to avoid penalties. “However, a reminder under section 142(1)(i) may be served requiring the taxpayer to furnish the income tax return if not filed within the last date,” he said. If you do not file your return by the last date, you will have to pay a late filing fee. Thus, if you miss the last day and file a belated return for the present financial year before December 31, 2019, then you may have to pay a penalty of Rs 5,000. However, this penalty will increase to Rs 10,000, if the income tax return is filed on or after January 1, 2020. To avoid getting notice and reminder: You must file income tax return before the last day for filing income tax return for a particular assessment year.
2. Misreporting LONG-TERM CAPITAL GAINS from equity
You need to provide detail of any realized long-term capital gains (LTCG) on listed equity shares and equity shares related mutual funds at the time of filing income tax return. LONG-TERM CAPITAL GAINS above Rs one lakh in a year on listed equity shares and equity shares-related mutual funds on which Securities Transaction Tax (STT) has been paid will be taxed at 10 %. Reporting LTCG on equity shres can be a bit consisting of many different and connected parts for taxpayers from the financial year 2018-19 onwards. SetyourBiz.com said that a review of high-value deals during tax scrutiny enables tax officers to identify not reported capital gains. “While finishing the assessment under section 143(3) the officers will include these as taxable incomes, ask interest on tax shortfall and begin penalty legal action under section 270A,” she said. Therefore, you should ensure that you have done the right calculation and have mentioned the information correctly. A simple calculation error may get you a demand notice, where the income tax department can ask you to pay the tax due. Accordingly in the income tax form. You should also cross check the Long-Term Capital Gains calculation details yourself with account statements and take the help of a tax advisor in case the calculations are too countless or complicated for you.
3. For Tax Deducted at Source (TDS) claimed not matching with Form 26AS
While filing ITR, the Tax Deducted at Source (TDS) should ideally have to be the same in Form 26AS and Form 16 or 16A. However, there can be many reasons why some details given may mismatch. Notices for Tax Deducted at Source (TDS) mismatch are issued under section 143(1). The reason for getting this notice is a mismatch in the Tax Deducted at Source (TDS) reported by the deductor to the revenue authorities and the Tax Deducted at Source (TDS) claimed in the return of income by the assessee.
4. For non-disclosure of income
Income Tax Department obtain information about income of assesses from many sources like banks, employers, tenants, mutual exchange of information between countries etc. If you have not shown some income in your income tax return, then you may get a notice from revenue authority if they detect the non-declaration. Notice is served under section 139(9) or 143(1) for non-disclosure of income. If the IT department receives any data that some income such as bank interest income or income from shares, etc. has not been declared by you and the taxable person is able to confirm the same, then the IT department will l serve you a notice for non-disclosure of income? To avoid getting notice: You must collect all your financial statements for the year and list out the sources of income from which you received income and then file your income tax return. SetyourBiz.com said, “If an assessee misses reporting a specific source of income in the IT Return, the same will lead to a discrepancy with the data already available with the Income Tax authorities resulting in the issuance of notice. Hence, before filing the IT return, it would be wise to check Form 26AS and the details of overseas incomes (in case of resident and ordinarily resident) like overseas bank statements, pay slips etc., and ensure that all incomes showing therein are disclosed in the IT Return.”
5. For filing defective return
If you do not file the IT return in the form prescribed by department, you will receive a defective IT return notice from the revenue department. You get a defective income tax return notice under section 139(9) of the Income Tax Act. Once received, you need to answer to it within 15 days from the date of receiving the notice. In a story line like this, if you have not correctly filed your income tax return, you may need to file a revised income tax return. You must try filing the revised income tax return before the deadline ends.