Receiving a notice from the Income Tax Department can be unsettling, even if you have filed your return on time. But why does this happen and how can you minimise the chances of getting a notice even after filing your income tax return?
There can be several reasons behind receiving a notice despite an error-free ITR filing. Staying informed about tax regulations and filing procedures can help reduce the likelihood of receiving a notice from the I-T Department. However, in case you receive a notice, take appropriate steps and seek professional help if needed.
It's important to know about the transactions that can attract a notice from the Income Tax Department. Let's take a look at possible reasons for receiving an income tax notice:
Savings Account Transactions
Transactions in savings accounts are regular and many people often have multiple accounts. But, they need to keep in mind certain guidelines for handling these accounts. If you deposit Rs 10 lakh or more in a savings account within a financial year, the Income Tax Department may send you a notice.
Real Estate Investments
If you are making a transaction of Rs 30 lakh or more to buy a property, this can result in a notice from the I-T authorities in case of non-reporting. To avoid complications, ensure that all of your real estate transactions are properly documented and reported in the ITR filing.
Fixed Deposits
A fixed deposit is a popular investment option that strikes a balance between safety and returns. However, if you are investing more than Rs 10 lakh in FDs during a financial year, you may receive a notice from the I-T Department. Taxpayers are advised to ensure their FD transactions are within permissible limits to avoid scrutiny by tax assessment officers.
High-Value Expenditures
Spending over Rs 10 lakh in a financial year, whether on luxury products, travel or other similar purposes, may also result in an income tax notice. Keep your expenses under control and keep accurate documents to prove your spending.
Foreign Assets
Purchasing a foreign currency worth Rs 10 lakh or more, including traveller's cheques, foreign exchange cards or transactions via debit or credit cards, can also attract a notice. It is crucial to report these transactions in your ITR filing properly to avoid receiving a notice.
Investments In Mutual Funds, Debentures
Mutual funds and debentures are popular investment choices because of their diversification benefits and potential for returns. But, making an investment worth Rs 10 lakh or more in mutual funds, debentures or bonds, during a financial year may also lead to a notice from the I-T Department.
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