Income tax

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Income Tax Refunds

Income tax refund is the excess tax paid by you which is refunded back by the Income Tax Department. For eg : tax you need to pay was Rs. 10,000 but you paid 15,000 or already deducted & deposit by the person responsible for in the form of TDS, then after filing your income tax return which would be showing tax refund of Rs. 5,000 the amount will be given back to you by the Income Tax Department.

Income Tax Planning

Tax planning is the analysis of a financial situation or plan to ensure that all elements work together to allow you to pay the lowest taxes possible. A plan that minimizes how much you pay in taxes is referred to as tax efficient. Tax planning should be an essential part of an individual investor’s financial plan

Income Tax Notice

An income tax notice is a written communication sent by the Income Tax Department to a taxpayer alerting an issue with his tax account. The notice can be sent for different reasons like filing/ non-filing his/ her income tax return, for the purpose of making the assessment or to ask the certain details etc. When a notice is sent by the Income Tax Department, the taxpayer has to act on the notice and get the matter resolved with the tax authorities.

Advance Tax

How is Advance Tax Calculated & Paid?

   Advance tax is to be calculated on the basis of expected tax liability of the year. Advance tax is to be paid in instalments as given below:
          a) In case of all the Assessee (other than the eligible Assessee as referred to in section 44AD and 44ADA):
                 i) Atleast to 15 per cent – On or before 15th June
                 ii) Atleast to 45 per cent – On or before 15th September
                 iii) Atleast to 75 per cent – On or before 15th December
                 iv) Atleast to 100 per cent –On or before 15th March
          b) In case of eligible Assessee as referred to in section 44AD and 44ADA:

100 per cent – On or before 15th March
Note: Any tax paid on or before 31st day of March shall also be treated as advance tax paid during the same financial year.
The deposit of advance tax is made through challan ITNS 280 by ticking the relevant column, i.e., advance tax.

Procedure / Process Of Income Tax

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People Do Some Common Mistakes People Do While Filing Income Tax Return (ITR)

Now a days many people file their own Income Tax Return (ITR) in lieu of taking service of Professionals or tax consultant. But a number of persons make some very common mistakes while filing ITR. Here we have provided a list of common mistakes so that people can avoid them.
    • Not claiming TDS Many times assesses are not aware of any TDS which are deducted from their incomes. Most common of them is tax deducted from interest accrued to them in the bank’s saving account or fixed deposit’s interest. So always check whether any TDS is made from your income and you can easily do this by checking your 26AS.
 
    • Not claiming deductions thinking that there is no taxable income Many a times people doesn’t show deductions while filing returns because there is no taxable income. They think because there is no taxable income there is no need to claim deductions. But this becomes a problem if assesses file go into scrutiny and taxable income is increase in it. Now because you had not claim deduction you have to pay tax.
 
    • Incorrect Bank Account number and IFSC code If incorrect bank account number or IFSC code is entered then IT refund cannot be processed electronically and Assessee has to contact the assessing officer to get the refund’s check.
 
    • Forget sending ITR-V to CPC If return is filed without digital signature and without Aadhar based verification then a signed copy of ITR-V is to be sent to Bangalore branch of CPC. The time limit for this is 120 days from the date of filing. In many cases the Assessee files return in time but forgets to send the signed copy which will invalidate the ITR.
 
    • Excess deduction claimed or no deduction claimed Assesse’s may fail to determine whether an investment is allowed as deduction or not. Assessee sometimes claims deduction or claims excess deduction from allowed in the act or in some cases don’t claim deduction while they are allowed in their case.
 
    • Selecting Incorrect ITR forms Assesse’s fails to determine which ITR form is to be used in their case and ending with filing wrong Income Tax Return form.
 
    • Incorrect or incomplete details Many a times assesses ignore the exempt incomes such as dividend and PPF interest while filing returns. TAN no.’s of the tax deductor is to be entered with utmost care.

    • Reporting incomes after deducting TDS Sometimes assesse sees the bank’s statement and enters the receipt amount as income, not considering the fact that the receipts are after deduction of TDS.

Due to above mistakes Income Tax Refunds Will Not Receive and Income Tax Department May Issue Notice and Raise Demand, Which Will Be Recovered from You by The Income Tax Department .

Types of Income Tax Notice

Types of Income Tax Notice – Understand the reason before you reply

1. Section 139(9): Defective Income Tax Return

Assessing Officer is of the opinion that ITR filed by the Assessee is defective. The Assessee is given an opportunity to respond within 15 days from the date of intimation or before it is assessed. If you don’t respond within 15 days then your return will be rejected by the AO. The defect u/s 139(9) can be the wrong ITR filed, missing information, incomplete return etc.

2. Section 131(1A): Income is concealed or likely to be concealed

If you AO is of the opinion that you are concealing the income or likely to conceal income then you will receive income tax notice u/s 131(1A). This notice is basically an intimation that AO is initiating an enquiry or investigate into the matter. The assessing officer can impound the books of account or other documents by providing reasons for the same. There is NO specific time limit to serve this notice.

3. Section 142(1): Preliminary Enquiry before an assessment

You will get a notice of preliminary enquiry in case the return is not filed on time. Alternatively, if the AO would like to go through the documentary proof to verify your claim in Income Tax Return, then he may ask you to furnish the documents for assessment purpose. The time limit to serve the notice u/s 142(1) is before the end of the relevant assessment year. For example, the income tax return filed for AY 2016-17, you can receive notice u/s 142(1) on or before 31st March 2017. This timeline is not valid in case the return is not filed by the Assessee.

4. Section 143(2): Follow up to the notice u/s 142(1)

If the AO is not satisfied with the response of the Assessee or Assessee fail to provide the documents against income tax notice u/s 142(1) as explained in the previous point then you will receive notice u/s 143(2). In this scenario, the case is called for detailed scrutiny. The AO may ask the Assessee to either attend his office in person or produce supporting, particulars and evidence in support of his claim. The timeline to serve notice u/s 143(2) is before the expiry of six months from the end of FY in which the return is furnished.

5. Section 148: Income escaped assessment

If your new AO does not agree with the assessment of previous AO then you can expect notice u/s 148. In short, even after assessment, if the AO is of the opinion that some income of the Assessee escaped assessment then income tax notice u/s 148 can be issued. As Assessee may be asked to file the income tax return for the relevant assessment, reassessment or re-computation.

6. Section 156: Notice of Demand

If any penalty, tax, fine or any other amount is due from the taxpayer to the income tax department then income tax notice u/s 156 is served. Normally this notice is served after the assessment of ITR. The taxpayer can deposit the amount payable within 30 days from the date of the income tax notice. There is no time limit to serve this notice. Income tax notice under section 143(1) and 200A are also referred as Notice of Demand.

7. Section 245: Refund adjusted against the tax demand

It is basically an intimation from Income Tax department. This notice is issued when the tax refund (full/partial) for an assessment year is adjusted against the tax demand due from the taxpayer. The assessment year of refund and tax demand can be different. There is no time limit to serve or send income tax notice/intimation u/s 245.

FAQ

It is a tax levied by the Government of India on the income of every person. The provisions governing the Income-tax are covered in the Income-tax Act, 1961.​

An exempt income is not charged to tax, i.e., Income-tax Law specifically grants exemption from tax to such income. Incomes which are chargeable to tax are called as taxable incomes.

Filing of return is your duty and earns for you the dignity of consciously contributing to the development of the nation. Apart from this, your income-tax returns validate your credit worthiness before financial institutions and make it possible for you to access many financial benefits such as bank credits, etc.​​

The excess tax can be claimed as refund by filing your Income-tax return. It will be refunded to you by crediting it in your bank account through ECS transfer.

Non-reflection of TDS credit in Form 26AS can be due to several reasons like non-filing of TDS statement by the payer, quoting incorrect PAN of the deductee in the TDS statement filed by the payer. Thus, in case of non-reflection of TDS credit in Form 26AS, the payee has to contact the payer for ascertaining the correct reasons for non-reflection of the TDS credit in Form 26AS.​