can Limited tax scrutiny be Converted to full tax scrutiny- a tax quick fix

Know how and when it gets worse– from limited tax scrutiny to full tax scrutiny

Knowing tax and its components properly is hands down a messy task to master. There are infinite layers after layers which are extremely complicated for a beginner to understand. On the top of it, the entire technicality makes it even harder. People who have small firms or companies get an adrenaline rush when they receive a notice 143 (2) by Income tax department. If you were eager to learn a thing or two about the basics of tax you are in the right place.

Today we will discuss these Income Tax scrutiny and under what circumstances the conversion of limited tax scrutiny to full tax scrutiny takes place.

What is tax scrutiny?

In a layman language, if a person receives scrutiny from the income tax department there surely has to be a reason behind it. Mainly, when the income is understated of the overstated expenditure made. The aim of scrutiny is to ensure if any amount has escaped the assessment of the department for Income tax.

What is limited tax scrutiny?

A limited tax scrutiny may take place when the department finds that there is potential escapement of income exceeding 10lakhs. For non-metro charges, the monetary limit is 5 lakhs. In case where any such evasion is suspected, the case would be selected for Limited Scrutiny. The case of limited scrutiny is generally detected by Software and also known as CASS, i.e. Computer Aided Scrutiny System

Under what circumstances the conversion from limited tax scrutiny to full tax scrutiny takes place–

1. If there is sudden rise or fall of income:

“I have paid all my taxes well in advance and properly” a line that Income Tax department will be pleased to read. Normally during limited scrutiny assessment, the assessing officer, is not supposed to ask for details other than those relevant for limited scrutiny. However in cases where the evasion is detected, the Assessing Officer, with prior permission of his seniors may convert limited scrutiny to full scrutiny

Also read: https://www.itrtoday.com/core-view-gst-goodbad-effects/

2. High-value transaction in the fiscal year:

If during the limited scrutiny Assessment, some suspicious deals leading to tax evasion are detected, the department may convert a limited tax scrutiny to full tax scrutiny

In case your case has been selected for Limited scrutiny, you need not panic and ensure to share all details as may be required by assessing officer promptly and preferably under some expert professional guidance. Avoid sharing any extra details not asked for by officer

In case, no significant evasion is detected, the case may not get converted in full scrutiny

Also read: https://www.itrtoday.com/restructuring-salary-tax-efficient-manner-can-increase-carry-home-salary-upto-10/