CA. Bhavik P. Chudasama
Quick Summary
Every year, when tax season comes around, I see a familiar trend. Many salaried folks - especially those working with reputed companies - assume that since tax is already deducted from their salary, there's no need to file an Income Tax Return. Let me stop you right there. That belief? It's not j
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FAQ :
Mr. Chudasama did not file his Income Tax Return (ITR) despite his gross salary exceeding the exemption limit. The Income Tax Department, using its AI-powered INSIGHT system, issued a notice which he didn't receive. Consequently, an ex-parte assessment was completed, disallowing all his legitimate deductions and exemptions, leading to a significant tax demand.
No, TDS deduction by your employer does not exempt you from the requirement to file an ITR. If your gross total income before deductions exceeds the basic exemption limit, filing an ITR is a legal obligation under Section 139(1) of the Income Tax Act.
No, that's a common misconception. Filing an ITR is mandatory if your gross income crosses the basic exemption limit, regardless of whether you are due a refund or need to pay additional tax.
The Income Tax Department uses advanced systems like INSIGHT, which is powered by AI, and the NMS (National Management System) to track individuals who have not filed their ITRs. These systems can identify non-filers even years after the due date.
The risks include facing ex-parte assessments where all deductions and exemptions are disallowed, receiving notices and demands for tax, interest, and penalties, and potentially initiating penalty proceedings. It can also lead to lengthy and costly appeal processes.
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