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Reasons for Income Tax Notice Research Team | Posted On Friday, August 02,2019, 05:10 PM

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Reasons for Income Tax Notice



Have you got a notice from the income tax department? Does this bother you? Why have you got this income tax notice? Is it because of some mistake you have made?

Popular mistakes made include, not filing ITR in time, errors in calculation, not reporting income properly or even claiming excessive losses.

Taxpayers generally get income tax notices under Section 139(9), 143(1), 143(2), 143(3), 245, 144, 147 and 148 of Income Tax Act, 1961. The income tax notices are for concealing taxable income, computing excessive tax losses, LTCG or Long Term Capital Gains and so on.

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Reasons for Income Tax Notice

1. You Delay Filing ITR

If you don’t file ITR within the requisite deadline (August 31st 2019), you get a reminder notice from the IT Department. You would get this notice before the end of the assessment year for which ITR is due.

If you don’t file ITR for FY 2018-19, you would get a tax notice before the end of AY 2019-20 (Before 31st March 2020). If you have taxable income, it’s compulsory to file ITR under Section 139(1). The automatic reminders tell you of the obligation under Section 139(1) and ask you to file ITR to avoid penalties.

If you miss the deadline of August 31st 2019 and file a belated return before December 31st 2019, you pay a penalty of Rs 5,000. It’s Rs 10,000 penalty if ITR is filed on or after January 1st 2020.

See Also: Income Tax Law And Income Tax

2. You Misreport LTCG From Equity

If you have realized LTCG (Long Term Capital Gains) on listed equity and equity related mutual funds, you must report these realized LTCG when filing ITR.

You have to pay Long Term Capital Gains tax on long term capital gains of Rs 1 Lakh or more in a financial year; for listed equity and equity related mutual funds.

Make sure you have made the right computation when calculating LTCG on equity. A calculation error would lead to an income tax notice.

What Must You Do To Avoid Getting This Income Tax Notice?

Get the capital gains statement from your broker or mutual fund house. Then fill the right details in the ITR Form. Cross-check long term capital gains or take the help of Financial Advisors to calculate LTCG tax.

See Also: How To File Income Tax Returns?

3. TDS Claimed Does Not Match Form 26AS

When you file ITR, TDS should be the same as Form 26AS and Form 16 and Form 16A. However, there are chances of errors and a data mismatch. (Details may not match). You would get an income tax notice for TDS mismatch under Section 143(1). The reason for this notice is TDS mismatch reported by the deductor and TDS claimed in ITR.

What to do to avoid getting this income tax notice?  Check TDS reported in Form 26AS and make sure TDS is reported properly by various deductors, before filing ITR.

4. You Don’t Disclose All Income

Tax authorities collect information on your income from different sources. This may be banks, tenants, employers and mutual exchange of information between countries. If you have not shown this income in ITR, you would get an income tax notice. This is if they detect non-reportage. You get the Notice 139(9) or 143(1) for non-disclosure of income.

If the tax department gets to know that you have not disclosed income from shares or interest income, you get this tax notice.

See Also: How To Reduce Income Tax In India?

What Must You Do To Avoid Getting This Income Tax Notice?

Collect financial statements and list out the income sources. If you forget a source of income, this leads to a data mismatch with the tax authorities. You get a tax notice.

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