Were you one of the recipients of a letter from the income tax department regarding non-filing of your income tax returns owing to some transactions you have done since 2010? If yes, you are not alone. The department has sent out letters to several lakhs of PAN holders who have done certain transactions, which the department classifies as “high value transactions”.
With effect from FY2016-17, for items (2) to (6), the limits have been revised to Rs.10 Lacs p.a. And post demonetization, the government has banned all cash transactions over Rs.2 Lacs, with a penalty for violation equivalent to the amount of cash transaction.
What should you do?
While many tax evaders have been caught through this exercise, some PAN holders (mainly senior citizens) whose income was below the tax slab were also sent this notice as they may have sold inherited shares for over Rs.1 Lac or have invested over Rs.2 Lacs in Debt Mutual Funds to generate tax efficient retirement income. Nevertheless, such assessees only need to submit a response via the compliance section of the IT portal and file their returns as a safe means to declare their income for the respective year(s).
Who should file a tax return?
If you have done any high value transactions in a year, file your returns, otherwise the department will make you file it. Also, if you forgot to submit form 15G/H, TDS will be withheld on your interest payments – department will send you communication to file your returns – so file a return and claim the refund of the TDS withheld. Other cases where filing of returns is mandatory:
- Gross total income before deductions exceed Rs.2.5 Lacs (Rs.3Lacs for senior citizens)
- Long term capital gains from sale of shares, although exempt from tax, must be declared
- Individuals with incomes of more than Rs.5 Lacs must do electronic filing
- And ITR-3, 4, 4S, 5, 6, 7 have to be mandatorily e-filed
In the first round, IT department has sent out such letters for transactions done from FY2014-15, however it is learnt that letters are also being sent to assessees for high value transactions from FY2010-11. While you may have filed your returns, do take stock of transactions done by non-working members and senior citizens in your family!