Non reporting of Exempt income:

One of the reasons for income tax notices is investment by taxpayers not in accordance with the income profile of the taxpayer. There are lot many taxpayers who don’t discloses exempt income on the pretext that it don’t have any tax implications. Exempt income includes income such as LIC money back, PPF withdrawals, ELSS withdrawals etc. Often the amount of exempt income is in lump-sum & invested back by the taxpayers in other investment avenues. By disclosing exempt income, taxmen are automatically able to link the source of new investment from exempt income.  Disclosure of exempt income in ITR forms also could be treated as self explanatory for the spending of the taxpayers towards foreign travel, credit card & other spending.

Verify 26AS before filing tax return:

26AS is a taxpayer’s statement showing the data of the assessee available with the income tax department. Taxpayer should verify that their return incorporates the data available in 26AS. Taxpayer should take efforts to rectify 26AS in case it contains entry not related to him. Taxpayer can avoid notices by verifying 26AS before filing income tax return.

Non filing of Income Tax Return:

Individual are required to file the income tax return only if income exceeds the basic exemption limit. Lot many taxpayers don’t file the return presuming that return is mandatory only if they have the tax liability. For example, a person with a salary income of Rs. 4 Lakh and 80C deduction of Rs. 1.50 Lakh is required to file the return of income as income is above basic exemption limit even though the tax liability is Nil. Non filing of return results in notice. It is advisable to file the income tax return even if the income is below basic exemption limit if they have carried out any high value transactions as it will enable them to avoid income tax notice.

Non reporting of transaction in Income Tax Return:

Non reporting of transactions in income tax return form is one of the most prominent reason for inviting income tax notices. Even though the transaction has resulted in loss, it is better to disclose the loss figure in income tax return so as to avoid notices. These types of incidents are often there in shares, mutual funds & property. Be careful, disclose & avoid unwanted notice from income tax department.

Wrong submission of 15G/15H:

Form No. 15G/15H for receipt of interest & other income without TDS are now required to be e-filed by the banks & other recipient. As a result, the income tax systems have handy information of all the taxpayers who have wrongly filed the declaration form. Taxpayers submitting this form in a casual way started receiving notice from the income tax department. All the more, the penalty for wrong submission is prosecution by the department.

Non deduction of TDS:

TDS net is widening so as to include individual taxpayers who are not in any kind of business or profession. Now, purchase of property above Rs. 50 Lakh attracts TDS. Also, payment of Rent exceeding Rs. 50,000/- p.a. also attracts TDS. Non deduction or non filing of the TDS return after deduction/payment invites Notice from the revenue office.

Non reporting of Cash deposit:

Change in income tax return forms is an annual feature. This year, income tax return form required taxpayer to disclose the amount of cash deposited in a bank account. Income tax systems have already received the information from the banks of all the taxpayers regarding their cash deposits. Taxpayers with heavy cash deposits or unmatched data are catching an eye of income tax.

Non reporting of all the Income: 

Not reporting of interest income from bank and other sources is one of the most prominent reasons resulting in issue of income tax notice. Income tax department gets information of interest, commission & other income of the depositor from multiple sources. Non reporting results in automatic issue of notices by the income tax system


Don’t forget to incorporate all the income details in income tax return. Don’t fail to file the income tax return. Disclose all the transactions, mainly of shares & property. Don’t be casual in submission of Form No. 15G/15H. Be updated about the changing tax laws, more particularly about the TDS provision on property & rent & do proper TDS. Report all income. Disclose all the bank accounts correctly with cash deposits figure. Verify 26AS before filing income tax return & be a happy taxpayer.