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December 23, 2013

Most Commoan Reasons for Getting Income Tax Notice

Not checking Form 26AS before filing
The Form 26AS has details of the tax paid by an individual during a financial year. You can easily access your Form 26AS online. Some banks also provide this facility to their Net banking customers. If 26AS reports any income on which TDS has been deducted and same is not reportted by you, then you are bound to get Income Tax Notice.

Mismatch in income and expenses & investments
Financial services firms, registration authorities and merchant establishments are supposed to report certain high-value transactions to the CBDT. The Income Tax Department gets all information on the basis of your PAN. The CASS matches this information with the returns filed by the taxpayer and promptly issue a notice if there is a mismatch in the income you have declared and your investments and spending.

Avoiding TDS by misusing Forms 15G and 15H
If the interest income on bank deposits exceeds 10,000 a year, the bank deducts TDS. You can avoid TDS by submitting Form 15G or 15H if you are not liable to tax. However, if you are trying to avoid TDS, you can get a notice from the tax department. Splitting the deposits in different banks or branches to avoid TDS won't help as the PAN gives you away.

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