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Tax Fraud and Penalties

Top 10 Facts About Tax Fraud and Penalties in 2019-2020

You are going to get worried if you received a notice from the tax office. We shall be looking at reasons why you can get such a notice and the penalties that come with such as we approach the turn of the year 2020.

  • Delay filing I-T return

When you fail to fill the I-T return form as of the due date, you will be sent automated repeated reminders before the end of the accessory period for which the tax is due.

If you pay to take action on the reminders, you will have to pay a late filing fee for missing the deadline varies from 1k to 10 k.

  • Showing under wrong head of income-

You might have disclosed the income but if it shown under wrong head then it a notice will be generated accordingly as it does not fit into that area.

A demand notice from the tax office will compel you to pay the additional tax due with penalties and interest.

  • TDS claimed not matching with Form 26AS

The claims on your TDS should match that on form 26AS; if that is the case, you are going to get a notice from the tax office.

Where a mismatch is noticed, the assesses will have to approach the appropriate deductor to update the reporting.

  • Non Disclosure Of Income

If you did not display your source of income in your ITR form, you will get a tax notice. It is advised that you check every detail on your Form26AS and all related matters before you submit your form to avoid the issues.

  • Exempt income

Even though a particular income is exempt if it is disclosed tomorrow it will help to substantiate that funds/investment made is out of accumulated savings not a sudden increase or undisclosed income.

  • Investments Made In The Name Of Spouse

If you fail to declare such investments that are made in the name of your spouse, you are going to receive a tax notice. There are clubbing provision under India Income tax act , where as in US there is joint filing of return and in India it is individual filing.

Your action will be considered a deliberate tax evasion and you will be made to pay tax on the income with interest as well as a penalty to go with it.

  • When You File A Defective Return

If the form you filled is not the one that relates to the income you are earning; you will get a notice. Defective return makes your return invalid as if it is not filed.

You have to respond within 15 days of getting the notice. You have to fill the revised ITR form before the expiration of the 15 days notice.

  • Where High-Value Transactions Are Detected

If you recorded high-value transactions without filling the income tax return, you will get a tax notice as the department will get the information from various sources like banks, financial institutions, mutual funds etc

To avoid such situation it always recommended to file the return on time .

When Your Return Is Picked For Scrutiny

There is sometimes CASS  scrutiny by tax department ; if your form falls under such category; you will receive a tax notice as they keep certain conditions to pick up any case based on the CBDT.

Setting Off Refunds Against Remaining Tax Payable

If you file a claim for refund and unpaid taxes are hanging on you; then expect a notice if you are detected.

  • Tax Evasion In Earlier Years

The officials have the power to assess your previous years. So please note that your case can be picked up at a later date to if found any malicious intent related to your return.