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Tuesday, June 12, 2012

How to tackle wrong tax demands from Income Tax Department in effective way?

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THERE are times when the individual tax payer receives a demand notice from the Income Tax Department asking for some amount to be paid after an assessment. While most people get scared from any such communication, it is important that an individual takes a careful look at the details that are mentioned here so that they know whether this is based on a correct calculation or whether there is some mistake. There have been cases where a lot of people have got wrong notices due to some error in the system of the tax department. Here is a look at the entire issue.

Details to be checked: Once there is a notice for payment that is received from the tax department based on an assessment that is undertaken by the department then there is a need to check the various details that have been mentioned. The assessment order will list out the various figures that are considered by the income tax department while fixing the amount of tax to be paid and this has to be checked with the details that have been submitted while the income tax return has been filed. This is essential to ensure that there is a proper way in which, these details have been considered so that there can be further action taken as and when this is actually required.

Evident mistakes: There are often some mistakes that are evident because it represents an area that should have been considered but has not actually been brought into the calculations. One of such example is that when the assessment is undertaken there is no inclusion of the tax deducted at source and the advance tax that has to be paid. When this is done then there is a position where instead of a refund or in cases where the exact amount of tax has been paid, there is actually a demand due that is shown in the records which means that the individual has to pay some money. Since this is a mistake there has to be some effort taken to rectify this mistake so that the correct picture is shown and hence some efforts would be required. There have been several instances where even figures that have been deducted and are showing in the tax departments online record have not been included at the time of assessment so this is something that needs to be checked.

System errors: Among the different types of errors that are witnessed another type is where there is some glitch in the software system. When this actually happens the individual is once again put into trouble because there is a small amount that is shown as being payable to the tax department. This might not be evident, but the check of the tax working will make this position clear and hence this is something that has to be done so that the right position is revealed. In many cases the individual pays the small amount thinking that this might be some mistake on their part but this is actually not the case.

There is a problem of these system errors as they have been recurring and over the last three years there have been many cases when these have occurred.

Individuals have to make a lot of effort to ensure that the position is rectified and hence they need to be on the alert for the entire position so that they do not miss out on the opportunity to clear the situation. This is not an easy task, but being ready for such a situation will help them, as they will be able to point out the mistake and avoid the unnecessary payment.

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