Every year, thousands of taxpayers are issued notices after discrepancies were found in their tax returns or their TDS details. There has been an increase of defaults in paying the tax or filing the IT Returns. If you are a taxpayer in India, how can you avoid IT notices? Explained
below:
- It is obligatory on the part of taxpayers while making investment or taking up a job to submit PAN No. Failure to provide PAN No. and / or providing wrong PAN No. will attract higher TDS and penalty. If wrong PAN No. is provided, the tax refund can even be credited to another account.
- Before filing IT Returns, taxpayers should ensure that all the investments with TDS have been mentioned in the tax return. Taxpayers should can get the details of tax paid during the financial year from Form 26AS which can be accessed online. Net banking customers can also get this facility from their banks.
- Taxpayers should make sure that there is no mismatch between their incomes and expenses & investments. Merchants, Financial service companies and registration authorities should report their transactions to Central Board of Direct Taxes (CBDT). The Income Tax Department, with the help of Computer Assisted Scrutiny System (CASS), gets all the information and co-relate with Taxpayers' PAN details.
- It is mandatory for every individual to file tax returns if gross taxable income before deductions is over and above taxable income ceiling. Failure to file the Return will attract a penalty of up to 300% of the outstanding tax amount. If the gross income before various deductions is more than the basic exemption limit and no tax liability lies, taxpayers should should promptly file the return.
- Returns should be filed by due date to avoid penalty. However, taxpayers can file their IT return till the end of the assessment year.
- Ignoring income from previous employers/companies is another mistake committed by the taxpayers. Taxpayers can get the details of Tax Deducted at Source on their income from previous employer in Form 26AS. Default in disclosing the same will attract panalty as IT department will be able to get the same from Computer Assisted Scrutiny System (CASS).
- If the taxpayers earn interest (from Banks deposits) over the amount prescribed by Income Tax Authorities, the bank deducts TDS for the same. If the taxpayers are not liable to pay tax, they can avoid TDS by submitting Form 15G or 15H.
- Taxpayers should clearly declare in the IT return, the interests earned from Bonds, FDs, RDs, PPF, Bank Savings & Post Office Saving accounts. Taxpayers will get total or partial exemption for the interest earned from them.
- If taxpayers get Notice from IT department, they should not ignore the same. All clarifications/queries in the notices should be promptly replied to avoid severe penalty.