The Income Tax Department has launched a drive to ensure greater tax compliance. Thousands of taxpayers are being served notices. The tax authorities now have an integrated database on taxpayers and can track all financial transactions. So care must be taken while filing the Income Tax return to avoid getting Notices from the department. The most common mistakes which attract IT Notices are: 1.Not Quoting PAN or quoting incorrect PAN 2.Not verifying TDS Credit with Form 26AS 3.Expenses & investments higher than Income Declared 4.Not filing Return for income > 2 lakh 5.Not declaring salary received from previous employer 6.Misusing Forms 15G and 15H 7.Not declaring interest on deposits and savings 8.Not responding to the notices from Tax Department

2. The Income Tax Department has launched a drive to ensure greater
tax compliance.
Thousands of taxpayers having discrepancies in their tax returns or
their TDS details are being served notices.
The tax authorities now have an integrated database on taxpayers
and can track all financial transactions.
So it is very important that care be taken
while filing the Income Tax return to avoid
getting Notices from the department.

3. The most common error occurs while quoting PAN.
Care must be taken to ensure correct PAN is quoted as the TDS
credit is reflected as per the PAN of the assessee.
PAN is mandatory for high value transactions and its absence
attracts 20% TDS deduction which is not even credited to your
account.
Quoting wrong PAN can attract a penalty of up to Rs. 10,000.
So always ensure that PAN is correctly quoted.

4. Form 26AS provides details of the tax paid and by an individual
and TDS credited to his account during a financial year.
Credit will not be available on the TDS deducted but not
reflected in Form 26AS, so you must ensure that the TDS
deducted by your employer, bank or any other deductor is
mentioned in your Form 26AS.
Verify whether all the investments reflected in 26AS are duly
mentioned in your Income Tax Return as any mismatch will lead
to a notice from the department.

5. Financial and Banking Institutions report high-value transactions
to the CBDT which the Income Tax Department received on the
basis of your PAN.
The CASS matches this information with the returns filed and
promptly issue a notice if there is a mismatch in the income you
have declared and your investments and spending.

6. It is mandatory to file Income Tax Return if your gross taxable
income before deduction is more than 2 lakh.
Non-filing of return can attract a penalty of up to 300% of the
outstanding tax.
But even if you have paid the tax or if there is no tax liability, you
have to file the return if gross total income exceeds basic
exemption limit.

7. Tax database of the Income Tax
Department has now been integrated and
will track the Salary received from your
previous employer and if TDS has been
deducted the details will be reflected in
Form 26AS
The CASS will immediately flag the
discrepancy if you don’t declare the salary
received from previous employer.
A penalty of up to 300% of the tax evaded
can be levied for this discrepancy.

8. Banks deduct TDS on the deposits if the interest income exceeds Rs.
10,000 in a year.
To avoid TDS, one can submit Form 15G or 15H.
This is applicable only for assesse whose gross taxable income is less
than the basic exemption limit, currently Rs. 2 Lakhs.
However, to avoid TDS, if you give a wrong declaration in, you can
get a notice from the tax department.
Submitting wrong declaration can invite a penalty of Rs.10,000.
Splitting the deposits in different banks or branches to avoid TDS
won't help as the PAN gives you away.

9. The interest earned on bonds, fixed deposits, recurring deposits
and savings accounts is taxable.
Banks and Financial Institutions deduct TDS on such interest and
it gets reflected in form 26AS so the interest should get reflected
in your tax return.
Not declaring the interest income will definitely attract notice
from the Income Tax Department.
Don’t forget to take benefit of the deduction of up to Rs.10,000
on the interest earned on your savings bank account.

10. Finally, never ignore the notices received from the Tax
Department.
Not responding to the notice will compound the interest and
penalty on the amount of your pending tax liability.
Moreover the Department can also go for Best Judgment
Assessment and pass a exparte order. In simple terms this
means that the Department will themselves determine your tax
liability and raise a demand notice which will not be favourable
to you.

11. Thank you
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