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How can you avoid getting a notice from I-T department?

income tax notices - II

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Rishabh Parakh

In my previous article, I explained various circumstances under which you may receive a notice. Today, let’s see how you can follow certain things to avoid getting a notice!

With the Income Tax (I-T) department becoming net savvy and going online, it has become very easy for them to identify discrepancies in your papers and to keep a close eye on almost every financial transaction you do. Even the honest taxpayers have received notices and have come under scrutiny causing them to run around to prove their honesty. Hence it becomes very critical for everyone to maintain their papers and documentary evidence properly to safeguard their own interest.

You need to take the following actions to minimise your chances of receiving a notice:
Always file your returns on time and correctly: This is the basic precaution you need to take to ensure 100% compliance with the law. Make sure you are filing the return correctly and all the details given by you while filling the return matches with the details available with the department.

Submit ITR V to Centralized Processing Centre (CPC) Bangalore: Your filing of taxes would get complete only when your ITR V reaches the CPC. Just uploading returns online is not enough; make sure you get confirmation of its receipt from the CPC. Please follow the Dos & Don’ts of sending ITRV to CPC.
Check your Form 26AS (Tax Credit Statement): “26AS” gives the details of the “TDS” deposited on your behalf. You should check all the TDS payments duly credited to you or get it rectified otherwise. It can be viewed though NSDL or I-T department’s site and even through the bank’s online portal.

Mismatch in Income & Expenses/investments: If your income was Rs10 lakh and you invested Rs25 lakh, you need to justify the source of used funds and the same applies to expenses also.
Gifts/Money credited to your account: If you have funds credited to your account out of gifts or loan from relatives/ friends, you need to keep the documentary evidence for the same. You may also need to report these transactions in a few instances.

Declaring “Exempt” Income: Even though some incomes are exempt from tax, you still need to declare this while filing your return.

Updating PAN details: Keep updating any changes in your Pan data like address/surname change after marriage etc.
Pay Advance Tax: if you are liable to pay advance tax, then you have to pay it as per its schedule & deadline.

Form 15H or 15G: Use Form 15H/15G instead of claiming refund, submit this at all the financial institutions like banks to prevent them from deducting TDS on your investments with them; in case your Income is below the taxable limit.

Avoid high value transactions: The department gets information for all your high value transactions from the institution concerned and chances of you coming under scrutiny increases. Avoid these transactions wherever possible and plan it carefully and legally.
(To be continued)

(Rishabh Parakh is a chartered accountant and founder-director of Money Plant Consulting, a leading investment & tax advisory service provider in Pune. You may mail your queries to him at
rishabhca@gmail.com)

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