One Should Be Aware of These Common Mistakes to Avoid Tax Notice

Sometimes mistakes become sin, and people who in order to get rid from the same gets indulged in mayhem. My sole reason of writing this blog is to make such people aware of the mistakes by giving several smart tips. A fortnight ago, one of my friends who works in an MNC, asked me to pay a heed to his problem that he filed all his returns very deliberately, and despite all, he received a notice from the Income Tax Department. And this is not a single incidence that we came to know so far, there are slew of problems which many of us encounter while income tax return filing.

And sudden incursion of Panama papers has made India to clarify its norms of paying tax so that no excuses are left on the part of tax payers. Stringent rules have been deployed to circumvent calculations mistakes which are at its peak, and due to which many of us face major problems, such as a penalty of about 300%. Sometimes individuals, who are well versed with the skills of paying tax, also get caught in the quagmire of mistakes. So underneath, I am suggesting some tips which all of you can adhere to:

1. Home loans: Many of us are still under the hay of this illusion that First homes buyers (who use to take loans) are exempted for up to Rs. 50,000. But it is high time for all of us to get acquainted with the correct information that this benefit is only up to Rs 35 lakhs along with the condition of cost of house should be less than Rs 50 lakhs. Along with this, if one purchases a house more than Rs 50 lakhs, one would require to deduct 1% of TDS from the payment to the seller, and if seller is a foreigner then this calls a two digit number TDS i.e., more than 30% and this amount is required to be deposited with the government by the seller by using Form 26 QB, and if not it attracts a penalty of up to Rs 1 lakh.
2. Ignorance of past jobs income: Many of us are still at the edge of ignoring past income, and therefore, this attracts the penalty of previous unpaid tax with an interest rate of 1% per month for delay.

• Prudent approach: Informing new employer about your previously earned income from the past job will keep you at the shore of receiving the notices from the IT department.

1. Relief to the pensioners: National Pension scheme (NPS) withdrawer relief has been introduced by the government by exempting their withdrawal of up to 40% from tax. Apart from this, in order to increase the participation of tax payers in paying their tax on time, government has also unveiled similar relief under the Employee Provident Fund (EPF), Superannuation Funds, and Recognized Provident funds which will be applicable after 1st April 2016.
2. Collection of foreign income: Not just investments but also gifts, salary, capital assets, and other type of overseas assets are required to be reported under the foreign assets schedule, and avoiding the same will make you liable under Black Money Act.
3. Gifting: We all are in our daily lives give and receive presents, and some of us deliberately use it as a tool to suppress As investment made in the name of the spouse or in the name of minor children is tax-free but it is not prudent to ignore if the property calls any income in the form of rent or in any other form then it will be counted in the income of the giver and will be taxed in toto.

• Prudent approach: One can invest the money in the name of their spouse or in the name of their children I the form of FD’s.

1. Tax declaration window: A compliance window for the domestic tax payers will be created for a short span of time period starting from 1st June to 30th September, so that they could declare their undisclosed income. Past tax transgression will be plugged in at 30% with the penalty of 7.5 % and surcharge of 7.5% {will be named as Krishi Kalyan surcharge which is to be used for agriculture and rural economy} making total of 45% with zero inquiry and scrutiny on the disclosed income.

Source of content:- https://www.letscomply.com/knowledge-hub/2016/05/one-aware-common-mistakes-avoid-tax-notice/

I am chandan kumar from letscomply.com, here is my designation is Seo Analyst.