It is our responsibility to file our income tax returns on time and accurately. This is perhaps the most sensitive and tedious process for taxpayers. However, even after taking all necessary precautions, one may still receive income tax notices from the tax authorities. So it’s natural to be worried if you receive one.
However, receiving an income tax notice doesn’t necessarily mean you did something wrong. It could be a routine audit or a request for clarification about some aspect of your tax return.
In this article, we will discuss why you may receive an income tax notice from the tax authority.
Top 5 reasons to receive an income tax notice
1. Income and tax payable do not match:
One of the most common reasons for receiving an income tax notice is a difference between income and taxes paid. It may happen that the income you declare in your income tax return does not match the income declared by your employer. This can happen due to various reasons like incorrect TDS deduction, mismatch in salary received etc. The tax authorities compare your income and taxes paid with the data received from the employer your and other sources to identify any discrepancies. In the event of a discrepancy, the department may notify you.
2. Not disclosing income:
Another reason for receiving an income tax notice is non-disclosure of income. If you have not declared all sources of income when filing your tax return, the tax authorities may issue you with a notice. This can be any income from interest earned on savings accounts, fixed deposits, rental income or capital gains. It is important to disclose all sources of income and pay taxes on them to avoid any future notices.
3. High value transactions:
The tax authorities keep track of high value transactions like cash deposits, real estate purchases, investments etc. If you have made any such transactions that are not in line with your income, you can receive income tax notices. It is important to maintain proper documentation and disclose all high-value transactions in your tax return to avoid any notices.
4. Failure to submit income tax return:
If you have not filed your income tax returns or filed them after the due date, you may receive an income tax notice. All individuals with income are required to submit tax returns on time. Otherwise, you may face penalties and interest.
5. Inaccurate tax declaration information:
If you provide inaccurate information on your tax return, you may receive an income tax notice. These could be incorrectly claimed deductions, incorrect PAN or Aadhaar numbers, incorrect bank account details or any other incorrect information. It is important to double-check all information before submitting your tax return to avoid any notices.
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It is important to file your income tax return on time and accurately to avoid any notices from the tax authorities. Be sure to disclose all sources of income, maintain appropriate documentation, and double-check all information before filing your tax return. If you receive an income tax notice, it is important to respond promptly and provide all necessary information to avoid any penalties or legal action.
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Source: pagasa.edu.vn