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Do you know why you can expect an income tax scrutiny notice?

Do you know why you can expect an income tax scrutiny notice?

 Income Tax Department has officially recognized 12 lakh citizens who have not recorded their returns, more than 20 Crores high esteem transactions are consistently investigated and Notices/letters to more than 1.5 lakh individuals have as of now been issued.

How about we take the initiative today and perceive how & under what circumstances a notice can be issued to you:-

1st Initiative – You have not recorded your return

Individuals become liable to compulsorily file income tax return provided their total income exceed the basic exemption limit of Rs. 2,50,000/-, even if the tax is already deducted (TDS) and paid. So if you ignore to file income tax return then you can expect a notice from department.

2nd Initiative – Interest Income generated from Fixed Deposits

This is one of the reason which can apply in the vast majority . You need to pay taxes according to your Income Tax slab. Bank deducts 10% tax against interest from FD but if you in a 20 % slab then you need to pay additional 10% tax for interest on FD  because you are in 20% tax bracket. So if you do not disclose this or do not pay additional 10% on interest at the time of return then you welcome a notice form IT department.

3rd Initiative-Sudden reduction in Income

Do you realize that any noteworthy reduction of your taxes from a year ago may cause suspicion and you may welcome an examination. Uniquely for the business people, their income is constantly changing unlike in case of a salaried individual, where usually no tremendous drop of salary happens in comparison to earlier year.  It raises a few eyebrows and IT division may need to converse with you. It may happen that you are not doing any duty evasion, yet IT division may need to inquire.

4th Initiative – Claiming Refund of Income tax on a higher side

In the wake of filing your income Tax returns  and claiming higher measure of refund  in a specific evaluation year , there are risks that you may get an investigation and commonly the tax office may need to observe information.

5th Initiative – TDS credit Mismatch with 26AS

Do you accept that forever your business/employer must have paid TDS legitimately or accurately? For that you generally need to accommodate or check 26AS with all TDS paid on your record. It ought to in a perfect world not happen that the TDS amount you are claiming in your Income Tax returns and the TDS actually reported in your 26 AS are not the same. Hence you need to painstakingly confirm your 26 AS and when everything looks superbly fine, then claim for the TDS amount.

6th Initiative – Non Reporting of Exempt Income

There are numerous pay like Dividend, interest from savings bank A/c  upto Rs. 10,000/ -, interest on PPF account and so forth which are exempted from Income Tax, however they must be still said in the Income Tax return. These are exempted from assessment, however that does not mean you don't need to educate  the Income Tax division regarding it. So now as you know,  make sure to take recording of exempt income important, because till the time you don't get IT examination it’s not an issue , yet the day you will get it, you will know it’s a torment.

7th Initiative - Taking twofold benefits because of change in employer

Ordinarily salaried worker who changed employment amid earlier year gets two different Form 16 & neglects to announce income from all the employers & compute and pay the due taxes, if any. It may emerge by virtue of specific deductions & exemptions given twice . Ordinarily, it has been watched that when individuals changes their employment amid  a year they neglected to educate about their past wage to their new employer or if at all they have pronounced it, they neglect to verify that it has been appropriately consolidated while ascertaining their tax liability and landing at a TDS figure and as a result of this disappointment, new employer will deduct TDS on the salary which will go from their side by giving and permitting all the deductions like 80C/Exemptions u/s 10 and so on once more (as the past employer had figured the same while paying TDS) and also basic exemption limit and initial tax slabs advantages are additionally given again bringing about lower deduction of taxes.

However because of absence of this specialized learning alongside a weight and delight of another occupation this goes unnoticed and there is a deficit in taxes which should be deducted and paid to the legislature; so be careful when you change your employment, educate your previous employer’s salary appropriately to your new employer to abstain from getting an IT take note.

8th Initiative – Doing transactions of Higher Value

In the event that you have executed high esteem transactions either for investments or spending then risks of you getting the notice from IT Department are high. For e.g. your credit card use of more than Rs. 2 lakhs p.a./ putting resources into FD’s for more than Rs. 5 lakhs/ saving more than Rs. 10 lakhs cash in your savings bank p.a. / contributing more than Rs. 2 lakh in Mutual Funds or   Rs. 1 lakh in Shares or purchasing or offering property over Rs. 30 lakhs. All these exchanges are accounted for to the IT office under Annual Information Returns recorded by individual organizations and may draw in an enquiry going from easy to thorough by IT division.

In case you have already got a Scrutiny notice from the income tax department and want an expert help, then please write to us at info@fundscoop.in. Thank You!

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