Explained- All about errors filling tax returns and responding to income tax assessments

Reasonable care must be taken when filing our tax returns to avoid significant inconvenience in the form of notices and penalties.

Common mistakes taxpayers make include filing tax returns with incorrect forms, failing to report details for all bank accounts, misreporting sources of income, and failing to verify electronic tax returns. You don’t have to be a tax professional to avoid such small mistakes.

Little mistakes, big worries

Although reporting is an annual process, many taxpayers repeat certain mistakes each year. Not reporting tax-exempt income, such as rental subsidies and vacation travel allowances, is one of them. “Not reviewing submitted tax returns or accidentally forgetting them is another mistake. Also, do not correct the discrepancy between Form 26AS and Form 16 for tax deductions and income, ”said Sandeep Sehgal, Director of Tax and Regulation at AKM Global.

If the two ways don’t match, you can get in trouble. “In the event that interest/dividends are not taken into account in accordance with 26AS, the tax office will issue an incorrect notification. This can generate additional taxes and interest for the individual. Therefore a 26AS and Form 16 review is essential, ”says Aarti Raote, Partner at Deloitte India.

Process income tax assessments

In the event of inconsistencies in the tax returns submitted by the taxpayer, the tax assessments will be sent to their registered email address. Alternatively, you can also access it through the official portal for the electronic filing of income tax returns. “The ‘Pending Actions’ section shows pending notices that require action from the taxpayer,” says Sehgal.

Sometimes things can take a more serious turn. You may receive an audit report in accordance with Section 143 (2) or an audit in accordance with Section 148. “In such cases, the audit judgments would indicate the reasons for the selection of the audio files and the request for information. of the person, “he explains.

Normally, a taxpayer has 30 days to respond to communications from the tax authorities. “He must respond to suggestions within 30 days of receipt. The deadline for responding to the notification is also expressly stated in the notification, ”adds Sehgal. If he needs more time to gather the information, he should request a postponement.

Unlike in the past, he does not have to react to the decision by submitting documents with details, explanations, and evidence of his claims on the tax return to the tax office. “Most agents now accept a response online. Also, if the notification/notification has been issued by the Central Processing Center (CPC), the responses can be submitted online on the portal, ”says Raote.

Never ignore income tax bills

If you do not respond to an audit notice, the agent will likely return the notice to you. “However, despite the reminders, the officer has the right to use his best judgment to complete Suo Moto’s assessment if the person does not respond to the advice,” says Raote. Rather, the officer also has the right to draw conclusions from the information. Failure to respond to the tax assessment on time can lead to criminal prosecution. “There will be a fine of Rs 10,000 for each violation. However, if such a violation is committed with a Presence Report, the taxpayer is considered to have nothing to say and an order is issued for the agent’s evaluation, ”added Sehgal.

If the information provided pursuant to Section 143 (1) contains a request for additional tax payment, a delay on your part may result in the information becoming a “request” pursuant to Section 156 to pay the amount total within the period specified in the notification. If the person to whom the tax assessment report was issued under Section 156 does not pay the required amount within the specified time, the taxpayer is liable for the prescribed penalties, ”Sehgal said. That is the interest on the tax to be paid. Therefore, after the 30-day period provided for in the tax assessment expires, you may have to pay 1% interest every month or part of it. In addition, the bankruptcy administrator may impose a penalty on the taxpayer in accordance with Section 221; however, it must not be more than the amount requested in the claim.

The only way to avoid these mistakes and unnecessarily reacting to tax bills and paying penalties is to be careful and attentive when filing your tax returns. A safer approach that I regret is your best option.