How to Become a Good Income Taxpayer?

You have paid all your taxes. You have filled your Income Tax returns diligently. Even then you get an Income Tax notice?! Before you foul cry, let us look at some reasons as to why you must have been on their list.

Incorrect details in the Income Tax Return-: You should fill your income tax return document carefully entering details such as name, address, and PAN Number. If there is any mistake in any of these fields, you might be served notice.

Due to TDS-: Another reason, why you might get a notice by the Income Tax department if there is any mismatch in a number of TDS which you have shown on your return and the actual TDS that has been deducted during the year.

You have paid your Taxes but not filed your Returns-: Are you sure you filed your returns? Paying taxes and filing returns are two different things. If you have only paid the tax but not filed the returns, the Tax department might send you a notice. Even if your taxes are nil after availing the deductions, you need to file your returns if your income is greater than Rs 2, 50,000. Some people file their returns after the due date, which may also lead to penalties. The timing too plays a major role in filing your returns.

Random Scrutiny-: The IT Department selects many returns randomly for scrutiny while processing the returns. Upon receiving these scrutiny notices, do not panic and read the notice thoroughly and do the needful within the time stipulated in the notice.

High-Value Transactions-: For all the high-value transactions that you enter with some entity or individuals, the higher your chances of getting a notice from IT-Department.

Transferring the Asset in the name of Spouse or Children-: This is the most common tactic by which people think they can evade taxes. The Income Tax department wants to make sure everyone is earning income are assessed. They want to ensure strict compliance. Therefore, it is advisable to go on the correct path when it comes to filing Income Tax returns.

Unpaid Tax on Interest Income-: Unknowingly, you might have excluded certain interest income that you have received but since the interest is credited to your bank account or reinvested in your assets, it is easy for the department to trace it back to you and you can get a notice for non-payment of tax.

WHAT NEXT?
If you do get an Income Tax notice, you need not panic. You should find the reason for the notice and take the appropriate step to satisfy the notice. You can either submit the documents or refile the returns after making the necessary corrections. Incorrect filing or returns is an offense. You can be charged penalties or even face imprisonment. Ignoring income tax notices takes time, money, and effort in the long run. Therefore, you should ensure that you file your returns correctly and respond to income tax notices if any, in the right manner.