Panic can be a natural response, but make sure you don't forget to respond to the tax notice.
Getting a tax notice from the Income Tax Department can be pretty unsettling, especially at a time when the top brass of the government is focussed on reducing black money and ensuring the citizens file their taxes correctly, and on time.
The government recently announced they would be issuing about seven lakh letters to individuals who have carried out high-value transactions without quoting the PAN card number. This includes cash deposits of over Rs 10 lakh in a savings bank account, the sale/ purchase of immovable property valued at Rs 30 lakh or more, etc. The transactions, the government says, were revealed during the Department's drive to curb down on black money, using the one-time amnesty-like compliance window due to close on September 30.
This has had many people worried and some are even losing their sleep over it.
While the government has tracked high-value transactions done without the use of a PAN card, for the convenience of those who get the letters, the Department has also developed a new functionality of e-filing, wherein such individuals can report the transactions and provide a structured response required electronically. For this, you can log-in to the e-filing website and quote a Unique Transaction Sequence Number provided in the letter. You can then link the transaction with the PAN card easily, the ministry has said.
If you get an income tax notice, here are three easy steps to follow:
1) Don't Panic or Ignore: It's understandable that your first reaction would be to panic, and even ignore the notice completely. These may seem like the easy way out but they are both wrong. The key is to handle the situation carefully and sincerely, or you may end up paying a hefty penalty.
2) Is the notice issued to your PAN card number? The Income Tax department issues notices based on the PAN card and not on the basis of names. So make sure that the notice is issued to your PAN Card, and not to someone else's, who may have a similar name or date of birth as yours.
3) Gather the documents: Start collecting the documents corresponding with the transaction that the department had identified. The idea here is to justify the genuineness of the transaction. The documents needed can vary depending on the gravity of the notice.
Keep the documents ready in case the asks you to submit and show them physically. But the first step is to submit an online reply on the new e-filing portal.
The author is a Chartered Accountant and the Chief Gardener & Founder Director of Money Plant Consulting, a leading Tax & Investment Planning Advisory Service Provider. He also runs a personal finance blog called “Mango Investor” aka AAM Niveshak at www.mangoinvestor.com. Readers are invited to send their feedback to rishabhparakh@moneyplantconsulting.net.
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