Filing ITR On Time Does Not Rule Out A Tax Notice: Three Mismatches Taxpayers Should Watch

Filing an income-tax return (ITR) before the due date may save a taxpayer from late-filing consequences, but it does not mean the return cannot be questioned later. The Income Tax Department (ITD) receives financial information from several reporting entities, including employers, banks, brokers and mutual fund houses. If the figures reported in the ITR do not tally with the information available with the department, a clarification may be sought.

For taxpayers who have already filed their returns, it therefore makes sense to keep an eye on the information reflected in their tax records and check whether anything material was missed or reported incorrectly.

A mismatch in income is one of the reasons a taxpayer may receive a query. Salary reported in the ITR, for instance, may differ from the amount reported by the employer through Form 16 or tax deducted at source (TDS) filings, according to a recent report by India Today.

Differences can also show up between the return and the Annual Information Statement (AIS), which captures a range of financial transactions and income-related information reported to the tax department.

A mismatch does not automatically mean tax evasion. It may arise from an omission, a reporting error or information that needs reconciliation. However, where the department’s records and the taxpayer’s return do not agree, the taxpayer may have to explain the difference.

TDS Or TCS Credit Is Higher Than Records Show

TDS or tax collected at source (TCS) can also create problems if the credit claimed in the ITR is different from what is available in Form 26AS or AIS.

For example, a taxpayer may claim a particular TDS amount based on a certificate received from the deductor, while a lower amount is reflected in the tax records. This can happen if the deductor has not correctly filed or revised the relevant statement, or if the information has not yet been updated.

Taxpayers should therefore reconcile the credit claimed in the return with Form 26AS and AIS and preserve the supporting documents.

Capital Gains Are Missed Or Calculated Incorrectly

People who sold shares, mutual funds, property or other capital assets during the year need to be particularly careful. Details of many such transactions are reported to the department by brokers, registrars, financial institutions and property registration authorities.

A query may arise if a taxable capital gain is left out, the sale or purchase value is entered incorrectly, or the gain itself is wrongly calculated. Multiple investment transactions can make such errors easier to miss.

Timely filing is important, but accuracy matters just as much. Taxpayers should retain their Form 16, Form 26AS, AIS, capital gains statements, and other supporting records so that any discrepancy can be checked and explained if the department raises a query.

FAQs

Can you get an income-tax notice even after filing your ITR on time?
Yes. The tax department may seek clarification if details in your ITR do not match information available in its records.

Can a mismatch in TDS or TCS lead to a tax query?
Yes. Differences between the credit claimed in the ITR and the amount reflected in Form 26AS or AIS can attract scrutiny.

Can incorrect capital gains reporting trigger a notice?
Yes. Missing transactions or errors in sale value, purchase value, or capital gains calculations may lead to a query from the tax department.