If you earn Rs 50 lakh or more annually, then be careful. The Income Tax Department is sending notices to such people on a large scale. The reason is the error in deduction and exemption.
Tax advisory platform TaxBuddy shared a case on In total Rs 9.44 lakh had to be paid.
Why increased strictness?
Now the tax department is using advanced technology and automated systems. Your ITR is now matched with Form 16, company information, bank and other financial transactions. Small errors which used to be avoided earlier are now being caught immediately. The government’s focus is on increasing the tax base and ensuring correct reporting. Special attention is being kept on those who earn more, because they are likely to get more revenue.
What should taxpayers do?
If you have claimed a large deduction, check your return immediately.
Match proof of investment with Form 16, HRA receipt, LTA, 80C and 80D. It is important to have correct documentation for every claim.
Revised Return or ITR-U?
The time limit for filing revised returns is limited. If that time has passed, then there is an option of Updated Return i.e. ITR-U. With ITR-U, you can correct mistakes up to 48 months after the end of the assessment year. But additional tax has to be paid in this. The greater the delay, the greater the additional burden. Keep in mind, ITR-U cannot be used to reduce tax or get more refund. This is only to correct under-reported income or wrong claims.
at last
Errors cannot be hidden in today’s data-based tax system. Instead of waiting for the notice, it is better to check yourself and make improvements in time. Otherwise a small mistake can cause a big financial blow.