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Technically speaking the form approved by Income Tax Authorities as per the requirements of the Income Tax Act 1961 is commonly called as the Income Tax Return comprising of various heads of income under which the assessment is done. broadly speaking the Income Tax Return is divided in to following five heads of income-

1. Income from Salary

2. Income from House Property

3. Profits and Gains from Business and Profession

4. Capital Gains

5. Income from other sources

In simple terms the Income Tax Return is the document wherein the assesse submits its earned income to Government and makes payment for the services and facilities availed by him called as tax which is supposed to be used by the Government for the welfare of the country only.

After receiving the tax returns, the tax authorities examines the returns filed and if due to any reason they believe that information submitted by an assesee is wrong or incomplete then the assesee is served with a notice demanding justifications/ penalty or any action as stated by the department in the notice so served.

There are can be some common mistakes which  can be done by the assesees  which attract the notice from the department and which should be avoided. The aspects which should be taken care of are explained as follows-

1. Complete / Appropriate Disclosure of Other Incomes in the return

One of the most common reason of receiving notice from Income Tax Deptt is non / inappropriate disclosure of income in the return for example, the non disclosure of income related to receipt of interest on savings bank account or Fixed/ Recurring Deposits. One must ensure to disclose such incomes accurately to avoid any objection by the Income Tax deptt.

2. Correct deduction of Tax as per TDS norms

One must ensure the deduction of tax on incomes in line with the statutory norms otherwise these type of issues may also result into receipt of notice from Income Tax authorities. This type of situation generally arises when the third entity inadvertently deducts the tax at a lower rate then prescribed in the law.

3. High Value Transactions must be disclosed with proper evidence and in line with the disclosures made by the third parties from where such income has arised

This is one of the most commonly neglected area where the assesee becomes most prone to receive notices from the Income Tax deptt. Being negligent while disclosing such high value transaction appropriately, assesse creates problem for himself. The same figure may be appearing in the disclosure made by the third party but in order to save tax or to minimize the tax liability, sometimes the assesee  does not discloses the same income in his return which should be avoided.

4. Mismatch in the TDS figure shown in the return vis-à-vis mentioned in the TRACES

The TRACES is a Govt website on which the details of TDS are uploaded. The mismatch in the figure appearing on the TRACES portal and the one mentioned in the return can invite the attention of the tax authorities and can result into the generation of tax notice for the assesse.

The commonly committed mistakes related to TDS are-

– TDS on property deals not made

– Not deducting TDS on rent

commonly committed mistakes

5. Defective Return should not be filed by an assesee

This situation may arise when an assesee does any of eth following errors-

– Filing of wrong return

– Non filing of any mandatory information

– Wrong mentioning of any particulars such as AADHAR, Bank no etc

In this case a notice under sec 139 will be issued to an assesee for submitting the revised return.

6. Income Tax Return should be filed

The assesee can also be served with a notice by the Income Tax Authorities if in any case he does not submits his Income Tax Return in any financial year, although he was submitting the same in the previous Financial years.

7. Timely payment of Advance Tax be ensured  

An assesee must ensure the timely payment of its advance tax as per the statutory dates mentioned in the respective provisions of Income Tax as described below-

For assesse who have not opted for Presumptive Taxation

On or before 15th June 15% of Advance Tax
On or before 15th Sept 45% of Advance Tax
On or before 15th December 75% of Advance Tax
On or before 15th March 100% of Advance Tax

For assesse who have opted for Presumptive Taxation

Before 31st March 100% of Advance Tax

8. Wrong reporting of LTCG on equity should be avoided

As this is the first year that the assesees will be reporting the LTCG from equity so there are bright chances that they might commit mistakes while showing the figures in their returns. The key particulars which are to be taken care of while disclosing income consists of-

– The amount of consideration

– The calculation of the fair market value

– The calculation of the cost of acquisition

amount of consideration

Author Bio

CA Rubneet Anand B.Com, M.Com(Finance& Taxation), MBA(Finance & International Business- IMT Ghaziabad) Deputy Manager (Internal Audit & Indirect Taxation)-M/s SML Isuzu Ltd Facebook Page- Corporate Prism-Consultation in Accounting & Corporate Managemen View Full Profile

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May 2024