NEW DELHI: This is the season for income tax notices. And with the government intensifying its drive against tax evasion, the number of notices sent out by the income tax department has almost doubled this year. However, both tax experts and the IT department say that in most cases, there is no need to panic.
“The department is very serious about any possible tax evasion, given low compliance. That is the reason number of cases we have picked up this year for scrutiny has gone up by almost double. So this year more people will receive notices,” a senior official from IT department told TNIE.
According to the official, on an average the IT Department is sending out 800-1000 notices every week after an extensive computerized risk analysis to shortlist people who are not compliant.
However, “Receiving a tax notice doesn’t mean you are a cheat. Tax notices are sent to people whose actual income has not matched with the income declared on their income tax return (ITR) form, which can be due to some calculation error also,” said Archit Gupta, founder and CEO of Cleartax, on online portal which helps users file their tax returns.
Many notices are sent out for innocuous reasons like minor errors in filing a tax return or lack of basic information. In such cases, all that is required is to submit the requested information.
However if the notice demands a scrutiny assessment, prepare yourself for a more detailed examination. In some cases personal appearance is also required if the assessing officer wants to discuss the case or verify documents against originals, which is not possible online.
What the notices mean
Notice under Section 142(1): Is issued if you have not filed your return or when assessing officer requires additional information/ documents. If these are submitted, there is usually no problem.
Notice under Section 245: Is sent if assessing officer feels there is tax demand which has not been paid for previous years and wants to set off the current year’s refund against that demand. If you do not respond within 30 days from the day of receipt of notice, assessing officer can proceed with adjustment without your consent.
Notice under Section 148: Is issued when the assessing officer has reason to believe you have not disclosed your income correctly and paid lower taxes, or if you have not filed your return despite falling under tax bracket. This can lead to penalties up to `5,000 per year. Respond immediately if you aren’t required by law to file a return.
Notice under Section 143(2): Is served when dept believes you have understated your income or paid lesser tax. Must respond immediately to the questionnaire issued and submit documents required by the I-T department.
Intimation under Section 143(1): Is served when there is an arithmetical error, or wrong tax calculation, in the return filed by you. Once you have clarified/rectified the issues, there should be no cause for worry.
What to Do When You Receive a Tax Notice
Check the date and Section under which notice is served. Save envelope with address and speed post date. Can seek some more time to respond.
Submit documents demanded by I-T dept and keep a receipt. If you have responded digitally, keep a screenshot of the acknowledgment message.
When submitting documents, prepare two sets, one for your own records.