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Capital gains exemptions under Section 54, Section 54F, and Section 54EC often trigger income tax notices when reinvestment details, timelines, or amounts do not align with the law. These provisions allow tax relief on long-term capital gains only when specific conditions are met, such as reinvesting in residential property or specified bonds within defined limits. Even small reporting errors in the capital gains schedule or missing proof can lead to scrutiny. Understanding h

Reassessment under Section 147 allows the Income Tax Department to reopen completed assessments when income is believed to have escaped taxation. These cases usually arise from mismatches in AIS, Form 26AS, high-value transactions, or unreported income discovered later through data analytics. With changes introduced after 2021, the reassessment process now follows a defined notice-based framework under Sections 148 and 148A, with strict timelines and safeguards. Follow-up inc

Wrong PAN reporting in TDS or TCS is one of the most common reasons taxpayers receive unexpected income tax notices. When deductors such as employers, banks, or buyers quote an incorrect PAN in TDS or TCS returns, the tax deducted does not reflect correctly in Form 26AS, AIS, or TIS. This leads to tax credit mismatches, delayed refunds, or demands raised by the Income Tax Department. Such errors are usually procedural, but if ignored, they can escalate into interest, penaltie

Wrong tax regime selection under the Income Tax Act, 1961, often triggers demand notices, refund adjustments, or mismatched tax computations. These issues typically occur when deductions under the old regime are claimed without eligibility, or when the new regime is applied without the required forms. Errors by employers or automated portal calculations can further distort the tax outcome. Early correction prevents unnecessary tax demands, and platforms like TaxBuddy simplif

PAN becoming inoperative due to Aadhaar mismatch is one of the most common reasons for income tax notices and stalled ITR processing. When the two records do not align, the e-filing system blocks refunds, rejects bank validation, and may treat the return as defective under Section 139(9). Notices under Section 143(1) also surface when income or transactions cannot be matched because PAN-Aadhaar is not linked. These issues disrupt the entire compliance cycle, making timely cor

AHigh-Value Transaction notice is issued when the Income Tax Department detects large financial activities that do not appear clearly aligned with the income reported in the return. These notices are not accusations but verification alerts generated through data reported by banks and financial institutions. A timely and accurate online response helps prevent penalties, scrutiny, or reassessment proceedings. Understanding why the notice was issued, which transactions triggered

Section 144 of the Income Tax Act comes into play when notices are repeatedly ignored, allowing the Assessing Officer to estimate income and pass an ex-parte best judgment assessment. The outcome often involves inflated tax demands because the order relies on third-party data, past records, and the AO’s reasonable assumptions. Ignoring notices under Sections 142(1) or 143(2) increases the risk of receiving a Section 144 order, especially when material information is not furn

Startups and freelancers often receive income tax notices because income does not arrive in fixed monthly patterns. Irregular project payments, fluctuating receipts, mismatches with Form 26AS, or incorrect use of presumptive taxation frequently trigger system alerts under the Income Tax Act, 1961. Notices under sections such as 143(1) or 139(9) are rarely about fraud but usually about mismatches, missing disclosures, or compliance gaps. Handling these notices correctly depend

Crypto transactions fall under strict tax rules, and income from Virtual Digital Assets must be reported accurately to avoid scrutiny. A flat 30 per cent tax applies to all profits under Section 115BBH, with no set-off or carry-forward of losses. Inaccurate reporting or skipped entries in Schedule VDA frequently trigger income tax notices, as the department matches AIS data with exchange reports and TDS deductions. Notices issued for AY 2023-24 and AY 2024-25 often arise from

ESOPs and RSUs from overseas employers often trigger income tax notices when perquisite values, foreign income, or capital gains are mismatched in the ITR. Indian residents are required to disclose vesting and sale details, report foreign assets, and claim foreign tax credits with strict accuracy. Any gap between employer reporting, broker statements, and Schedule FA data frequently results in automated system-generated notices. With cross-border filings becoming common for g