With the last date for filing of Income Tax Returns (ITR) done and dusted on August 31, it is time for taxpayers to get ready for the next step: notices from the I-T Department. If you are one of those who have received a notice, there is little reason to panic, say tax experts.
Most tax notices are for routine mismatches or errors in filing that can be rectified very easily. “The tax department selects less than 1-1.5 per cent of the tax returns for scrutiny usually. And even those whose ITRs have been picked can go through the process as long as they keep relevant documents ready,” noted V Krishnan, a chartered accountant based out of Chennai.
Among the most common reasons the taxman shoots off a notice are:
Defective return (Section 139 (9))
Notices under this section of the Income Tax Act are sent out when the assessor or the system detects faults in the way returns have been filed. For instance, taxpayers with income from multiple sources may have used the wrong ITR form. Or has claimed a refund for deducted tax but hasn’t mentioned the relevant income or attached necessary documents. PAN numbers and names might not match or the entire tax amount may not have been paid. Notices under this section generally allow up to 15 days to respond. If revised ITRs are not filed within the stipulated time, the returns could be invalidated by the department.
Income related issues (Section 143(1))
Notices under this section may be a simple intimation that details in your ITR have matched and you have paid the correct amount of tax. However, they may also be for a refund or a demand for additional tax. While no action on the taxpayer’s part is needed in the first two cases (refunds are made automatically to the taxpayer’s bank account), a demand for additional tax generally means the taxmen think you haven’t fully disclosed your income details completely. In the latter case, 30 days are allowed for the taxpayer to pay the additional tax or reply with valid proof.
Mismatches in TDS/deductions (Section 143(1A)
Notices under this section are sent to taxpayers in whose case there are discrepancies in the Tax Deducted at Source (TDS) claims (the Form 16 for salaried employees for instance), or in the deductions claimed. The taxpayer can respond to the notice for clarification from the Income Tax Department by logging into the online ITR website and submitting the explanations under the e-proceedings category along with the valid documents.
Returns under scrutiny (Section 143(2))
Notices under this section are sent to taxpayers whose returns have been chosen for scrutiny by the Department. The returns are selected randomly and those who receive the notices are expected to respond according to the time notified in the communication with all documents requested by the authorities.
There are other notices that taxpayers may receive too, though less common than those listed above. For instance, notices under Section 148 may be sent in cases where the assessing officer thinks there may be some income that has escaped notice and notices under Section 245 may be sent in cases where the assessing officer identifies some outstanding tax dues.