5 Common Mistakes That Trigger an Income Tax Notice
Most notices aren’t about hiding income — they’re about a number in your return not matching a number the department already has on file.
The income tax department’s systems now cross-check your return against data reported by banks, employers, mutual funds, and registrars in real time. Most notices we see clients receive aren’t about undisclosed income at all — they’re about a figure in the return not matching a figure the department already has.
1. Form 26AS / AIS mismatch
Your Annual Information Statement (AIS) now shows far more than TDS — dividend income, mutual fund transactions, high-value credit card spends, and property registrations all show up. If your ITR doesn’t account for something visible in AIS, expect a query.
2. Unreported interest income
Savings account interest, fixed deposit interest, and recurring deposit interest are all taxable and all reported to the department by your bank. "I didn’t get a TDS certificate" doesn’t mean the income wasn’t reported — banks report interest even when TDS wasn’t deducted.
3. High-value transactions
Cash deposits above ₹10L in a year, property purchases above ₹30L, and certain large mutual fund or credit card transactions get reported to the department under the Statement of Financial Transactions (SFT). If your declared income doesn’t plausibly support the transaction, that’s a common trigger.
4. Claiming deductions you can’t substantiate
HRA claimed without a rent agreement or rent receipts, 80C claimed for an investment that lapsed mid-year, or a deduction claimed twice across employer and personal filing — these are increasingly flagged by automated scrutiny before a human ever looks at the return.
5. Not filing a revised return for a known error
If you spot an error after filing — a missed income source, a wrong bank account for refund, an incorrect deduction — a revised return filed before the deadline is a routine correction. Leaving a known error uncorrected and hoping it goes unnoticed is what tends to escalate a simple fix into a notice.
If you’ve already received a notice, the response window is usually short and the language is formal — it’s worth having someone review it before you reply rather than after.
Have a question about your own numbers?
Talk to our team, or run the numbers yourself first.