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How is your IT return examined by the IT department?

How is your IT return examined by the IT department?

Date : 10-6-2016

Method of examination of IT returns

For a deeper probe, the IT department generally call for furnishing additional details to those IT payees whose returns are under investigation. With this additional information, the It department ascertains this whether the true return of the taxable income by the payee has been declared or not. Besides, it also tries to find this whether the tax deduction by the payee has been correctly calculated or not. The parameters of investigations are determined by the CTBT (Central Board of Direct Taxes). The aim of these parameters are to discern it that among the details filed, which detail would be selected for scrutinising upon what detail. The yardsticks applicable on you on the basis of the business being carried on by you will depend on the following factors:-

1. Professional: The IT department has tightened the norms of measuring yardsticks for the professionals which shall be applicable on you if you happen to be a Doctor, lawyer or chartered accountant. If the total income earned by you during a financial year is more than 10 lacks but the declared net taxable income by you during that financial year is less than 20 % of your entire income, your return will come under the lenses of examination.

2. Brokers: If you happen to be a broker through a corporate institution, and receive worth 1 crore or more of brokerages within a financial year and declare your net taxable income during the financial less than 10 % of your total brokerage income of tax deduction, then your return shall come under the purview of examination. If you file claim for 10 lacks or more of it for tax deduction during a financial year in the name of bad debt, your return once again will come under the boundary of investigation. If you are working in an institution under partnership and earning 50 lacks or above as income in a financial year as brokerages but declare 10 % less income than that year's entire brokerage income then your return thus filed would be subject to scrutiny by the IT department. Alongside above, if you claim for a tax deduction of 5 lacks or above it, during a financial year in the name of bad debt, your return will come again for scrutiny.

3. Contractor: If you are a contractor on behalf of a corporate organization and your entire income earned during a given financial year becomes more than over 2 crores but the declared net taxable income by you during the year in question is less than 5 % of the total earned income during that year, your return shall be subject to scrutiny.

Conclusion:
Don't let the situation of scrutiny come. The procedure of investigation undertaken by the IT department is tiring and extremely boring. Besides this could end with heavy penalty as a result of which, you shall be paying more than what was formerly to be payable by you.

Therefore it's always better to declare your entire income and pay the taxes correctly if you wish to live in peace.