Income tax plays an important role in promoting the growth of the country economically and thus; it is natural for the government to act strictly when it comes to taxes. If you recently got a message from the Income Tax Department stating that you are running behind on your taxes, and wondering that what could have gone wrong, then there is no need to worry about it; we will help you.
Additional Reading: Benefits of Filing Income Tax Return Before July 31, 2017
Under Which Circumstances a Tax Amount Can said to be due?
Nobody likes a due tax message while filing for tax return as it will compromise the reputation of personal financial records. There are numerous reasons for the tax being due and in most times, the Tax Deducted at Source (TDS) payment is missed from the income declared. Below listed are few things which might help you to find the error.
- If you are employed on salary basis then, your employer is responsible for cutting the tax based on income information and deductions. On the other hand, if you failed to reveal your income information from sources like a rental home, then for that extra income you are required to pay additional tax.
- If you work involves commitment to more than one employer, (suppose as a freelancer in addition to your regular job), there is a chance that you will overlook it in your tax return. The extra income you are earning may push you to a higher tax slab. To understand this point, let us take an example. Suppose, your annual income is Rs 7, 50,000 and your earning from freelance assignment is Rs 3, 00,000 then you will fall under 30% tax slab instead of 20% tax slab.
- If you recently changed your job and failed to submit the investment proofs to the current organization, then the tax will be due, and if your current employer overlooks this tax, you will be required to pay the amount due.
- The taxation of interest from bank deposits is similar to the salary income. If the annual interest income from the bank deposit is lower than Rupees 10,000, then the bank will not deduct tax. Hence, you have to include this in your income from other sources when filing the returns.
- If you had a capital gain from a mutual fund, then it is necessary to include it to your total income when filing the taxes if the gain is less than one year.
- On the other hand, there is a possibility that your Tax Deducted at Source (TDS) payment is not reflected as per Form 26AS. Make sure that all your TDS entries in the Form 26AS appear on the return. Or there is a possibility that the entries on the income tax return are not filled correctly.
Additional Reading: How to Claim for TDS Refund?
Things to Do If You Receive a Due Tax Notice
The first and the foremost thing to do when receiving a due tax notice is to pay it immediately as possible as it will attract the return of 1% every month or you have to pay the penalty equal to the outstanding tax.
Step by step guide to paying the outstanding tax:
- Select Challan 280: Open the Income Tax Department portal and simply select Challan 280.
- Enter Personal Details: Provide your details like name of the tax payer, address of the tax payer and type of payment. If you are paying the taxes at the point of the financial year, opt for “(100) Advance Tax” and if you get a demand notice from the Income tax Department, opt for “(400) Tax on regular assessment”.
- Double Check: After providing all the details, make sure to cross check everything before proceeding to the next step.
- Transaction Process: The transaction will take place online, and the due amount will be debited from your bank account. When the transaction is successful, you will receive Challan Identification Number (CIN) as an acknowledgement. It will consist of all the details about your transaction.
- Verify Receipt: Using your Form 26AS, the challan can be verified through the CIN.