Suspense Crime, Digital Desk : More tax notices are landing on the doormat- here are some of the most common errors which attract these notificationsA tax notice being issued, perhaps the most frequent cause, is the mismatch between the amount declared in your IT Return (ITR) and that listed on Form 26AS or Annual Information Statement (AIS) or Taxpayer Information Summary (TIS).As the Income Tax Department's reliance on technology grows, there has been an increase in the number of tax notices sent out to taxpayers. AI, and a wide-reaching data analysis system that connects banks and other institutions directly with the tax authorities, has become immensely adept at identifying even the most minuscule discrepancies. But you shouldn't necessarily take a notice as an accusation of tax evasion; more often than not, it is indicative of mistakes and oversights which could easily have been prevented.Causes behind a tax noticeA tax notice being issued, perhaps the most frequent cause, is the mismatch between the amount declared in your IT Return (ITR) and that listed on Form 26AS or Annual Information Statement (AIS) or Taxpayer Information Summary (TIS).According to CA Ruchika Bhagat, MD, Neeraj Bhagat & Co., common oversights leading to discrepancies are interest on fixed deposits, dividends, capital gains or freelance work, all of which taxpayers often forget to report.Another frequently identified mistake is in claiming deductions."Taxpayers sometimes claim deductions under 80C, 80D or House Rent Allowance (HRA) without proper supporting documents. If department asks for proof and we don't have adequate evidence to back our claim, they will issue notice," said Bhagat.High-value transactions are being closely monitoredHigh-value financial transactions too are under strict watch. A high cash deposit, big credit card spending, purchase of property, or even a foreign holiday are all reported to tax authorities by financial institutions, and if this amount does not add up with what is declared in the return, taxpayers will be made to answer for the discrepancy and the source of such funds."It is also not uncommon for individuals to fail to account for all income. For example, salried employees will claim tax only on the salary received, completely forgetting their earnings from rental properties, bank savings, or side businesses. These omissions will be picked up automatically by sophisticated systems," Bhagat stressed.Filling the wrong ITR form is another frequent oversight. Different categories of taxpayers have different prescribed ITR forms based on income type. An incorrect form could lead to the IT Return being considered defective, resulting in a notification from the department.To avoid a notice: reconcile your ITR with AIS, TIS, Form 26AS, preserve proof of income, disclose all sources of income, and ensure you file your IT Return on time.
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