FINANCE

Have income tax refunds? Keep deduction proofs ready or get ready to pay 200% penalty

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Taxpayers are getting intimations generated automatically online from the Income Tax Department, if additional deductions are claimed in ITR resulting in income tax refund out of the tax deducted at source by the employers.

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Taxpayers are getting intimations generated automatically online from the Income Tax Department, if additional deductions are claimed in Income Tax Return (ITR) resulting in income tax refund out of the tax deducted at source (TDS) by the employers. Such intimations get auto generated in case there are discrepancies in the figures mentioned in Form 16 and the figures entered in ITR resulting in tax refund.

Following issuance of the auto-generated intimation, the recipients will get 15 days time to revise the returns to remove the discrepancies with Form 16 or will have to pay a 200 per cent penalty if deductions are claimed falsely.

“Many taxpayers got such intimations last year also,” said CA Karan Batra, Founder and CEO of CharteredClub.com, adding, “It is not a tax notice, but a gentle reconfirmation.”

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In case of genuine claims, you need to keep ready the proofs of investments (like subscriptions/investments to NPS, PPF, SSY, NSC, SCSS, tax-saving FD, ULIP, ELSS etc.) and/or expenses (like payment of life/health insurance premium, tuition fee receipts of children, home loan interest and repayment of home loan principal etc.) and/or proof of donations given etc.

This is because you may get a proper Income Tax Notice after manual verification of the auto-generated intimation, if the ITR is not revised within the 15-day period.

“Although the probability is low, it may still happen,” said Batra.

In such a case, to avoid paying a 200 per cent penalty, you may have to upload the investment proofs in the slots provided for the same on the e-filing portal.

So, in case you have made tax-saving investments or have deductible expenses or have donated money in the organisations eligible for tax deductions u/s 80G of the Income Tax Act, but haven’t revealed these to your employer for TDS benefits, keep the proofs of such tax-saving investments / expenses / donations handy to avoid any inconvenience.

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