Things not to hide from Income Tax Department

It has been seen in past, that there is a tendency amongst some of the tax payers to show less income so as to pay less taxes. However, please be careful that there are certain transactions which Income Tax departments are well aware of in advance. Hence, it’s better that we self-disclose it rather than creating problems for future. Here are some of such transactions:

1. Cash deposit above Rs.10 Lacs per annum in saving bank account is being reported by Banks to IT Department with PAN details of the assesse. Hence, it is advisable that assesse be prepared to explain the sources of such funds.
2. Any purchase and sale of property above Rs.30 lacs gets reported to IT Department. Thus, the purchaser should disclose the source of income from which the payment for property has been made and seller report capital gains on the sale of the property in its Income Tax Return.

iii. Further, if the value of transaction is above Rs. 50 lacs, then the purchaser need to deduct TDS at 1 % and deposit it with IT Department and file Form 26QB disclosing all details about the transaction.

1. Interest on Bank Fixed Deposit, if it is above Rs. 10,000 per annum, then Bank’s are mandatorily required to deduct TDS and deposit it with IT authorities with all details.
2. Never understate your salary to reduce your tax liability. At the end of each quarter, the employer files the TDS return in which the employer declares the salary paid to all the employees on a monthly basis and thus Income Tax Department captures all the salary data from the TDS return. Any understatement in it would invite their attention.

Thus, one should not try to evade any income as the Income Tax Department can easily trace it out by analyzing your financial transactions.

Note:
Income tax department recently notified changes in the income tax return. It has made it mandatory to disclose all the bank accounts with the following details:
a.      Name of the bank
b.     Nature of Account i.e. Saving or current
c.      IFSC code
d.     Account no.

It is also required to select the account where you would like refund to be credited irrespective of whether you have a refund due or not in your income tax return. If all your active bank account details are not disclosed then you’ll be penalised. Maximum penalty may be 300% of tax sought to be evaded and minimum is 100% of tax sought to be evaded.