5 Tips to Avoid Income Tax Notice due to Property-Related Transactions
Filing of your Income Tax Return
This includes buying or selling a property, receiving a gift of property, or taking a loan to purchase a property. Even if your income falls below the taxable limit, you are still required to file an income tax return if you engage in these kind of transactions.
Income source sufficient to justify the purchase
If you have purchased a property using your own funds, you should ensure that your income source sufficient to justify the purchase as per your income declared in your income tax return.
You must include any capital gain made in the income that you declare.
If you have sold a property, the capital gain should be part of your income disclosure in your income tax return. This is an important, very important aspect as nothing goes unnoticed.
Property as a gift from a relative
If you have acquired a property as a gift from a relative, it is important to show the gift amount under exempt income in your income tax return. This will help avoid any queries from the tax authorities
Loan from a relative to purchase a property
If you have taken a loan from a relative to purchase a property, ensure that you have receipts of that loan transaction through a bank, and that the receipts are signed by the relative. It is also important to ensure that the relative's income tax returns are filed regularly.