Getting an income tax notice can fill the air with fear. Such notices are generated by the income tax department about the problem in your tax account. Although it may lead to serious repercussions, it is important to understand the major reasons why you may get an income tax notice. If you have one or want to avoid getting such notice, you can hire business tax preparation in Westchester, NY.
Reasons To Get An Income Tax Notice
Here are the top reasons to get an income tax notice:
1. Mismatch in TDS
When you file the ITR, all the information matches the data mentioned in 16 and form 26AS by the income tax department. If there is any sort of misinformation or the data does not match completely, it may lead to an income tax notice.
2. Investing in your family’s name
Another common reason you may get an income tax notice is when you invest in the name of your family, including your spouse or children. At times, you may not disclose these investments in front of the income tax department with the aim of avoiding additional income tax. In such situations, the income tax department may send you a notice.
3. Discrepancy in income tax return
By any chance you have not disclosed your income properly or the official finds something suspicious or a discrepancy in your income tax, they may send you an income tax notice. To avoid such a condition, collect all important information and documents of your income sources, like bank statements, salary slips, bills, or others, and present them to the department.
4. Not filing income tax returns
One of the most important tasks is to file an income tax return before the due date arrives. You may sometimes forget to file an income tax return even after continuous reminders; in such conditions, you will get an income tax notice under Section 142(1)(i) of the Income Tax Act.
5. Not mentioning high-valued transactions
If you haven’t mentioned high-valued transactions like cash deposits for Rs 1 crore, withdrawals of ₹ 1 crore or more, Credit card payments of ₹ 10 lakh, and others, you can get an income tax notice.
If you get an income tax notice, it is best to hire an income tax lawyer to help you get out of this condition.