There are top reasons where taxpayers get into trouble with the tax authorities. These cases were relatively rare earlier but are now becoming common in the present day and age. The tax department has also upped all its efforts so as to ensure that there is proper tax compliance by the taxpayers. The loopholes in the existent system have seen some new rules in the recent past, and there have been all efforts to make all the processes foolproof so that there is no evasion and the tax evaders do not get away without paying their share of the tax. The tax records are also scanned, and in case there is a discrepancy, notices are sent to the concerned individuals.
Top Reasons where Taxpayers get into trouble with the Tax Authorities
Here are the most common mistakes that you can make that will get you notice from the tax department for sure.
Not filing your tax returns in time
People who have an income above the basic exemption are liable to pay taxes and therefore, also file their tax return. The basic exemption limit is Rs 2.5 lakh per annum, for the senior citizens, Rs 3 Lakh for senior citizens above the age of 60 years while those above 80 years old, it is Rs 5 lakh. Even if you pay your taxes, you are still liable to file your income tax returns. Agreed, it is not a serious offense, but you will surely get a notice to pay them in time. The laws are such that you can file for the returns even after the due date has gone by. You must ensure that you file for returns even if you have paid all the taxes. You can also file the returns online in an easy and convenient manner.
Not reporting your foreign assets
Taxpayers should be very careful about this particular area. They have to be sure at all times of their property and foreign income. The government does not intend to take lightly any misreporting of foreign assets. There can be a high penalty of about Rs 10 Lakh or even more if you have not represented the property accurately. There is also need to report the bank accounts if you are just a signing authority in them.
Not reporting the interest income
Not reporting your interest income is a common problem done by many. Any interest from the recurring deposits, fixed deposits or some other tax saving bank deposits is taxable. In most of the cases, the interest income is unreported. But there have been new rules that are introduced so that these loopholes can be addressed. Most assessee live under impression that since they have already paid taxes on the income out of which FDR has been made, no further income on it needs to be declared, which is wrong. You must report the interest earned on your savings to be tax compliant
Not taking into account income from the old job
If a person switches a job, then there are chances that the new employer will not consider the income that has been earned from the previous job and therefore, there will be no deduction or tax exemption for the employee, and this is a major problem faced by frequent job changers. There is a huge tax liability that they get when they have to file the tax returns. But you cannot get away without mentioning the income of the previous job.
It may be noted that the previous employer will file his TDS return declaring all the salary paid to you and your PAN number from where the income tax department would be able to link all salary income received by you from any employer. So if you don’t report it, the discrepancy will be picked up by the system, and you will immediately be slapped with a notice.