An income tax notice simply means the department wants to double-check something in your tax filing. It’s quite common, so there’s no need to stress. You just need to understand what it’s about and reply on time.
Read on to understand the main income tax notices for salaried individuals, why they’re issued and how to deal with them easily.
Income Tax Notice: Overview
An income tax notice is a formal communication sent to taxpayers by the Income Tax Department when they need additional information or clarification. You might receive one if:
- You have not filed your tax returns on time or at all
- There’s a mismatch between the declared income and the details in your Form 16, Form 26AS, AIS or TIS
- You’ve underpaid tax or missed disclosing certain income sources like bank interest or freelance earnings
- Claimed deductions or exemptions beyond the allowed limits under sections like 80C or 80D
The notice will mention the specific section of the Income Tax Act under which it is issued. It will include details of the discrepancy and the documents required for clarification.
Income Tax Notice Types in India
The Income Tax Act of 1961 has various provisions for issuing different types of notices. Here are some key types of income tax notices for salaried employees that they should know about:
- Intimation Under Section 143(1): This is a common notice that tells you if your tax calculation matches the department’s records. It may confirm no difference, mention a refund or ask for additional tax payment.
- Notice Under Section 143(2) and 143(3): This is issued when your return is selected for scrutiny. The department checks income details, deductions and tax payments for accuracy. After assessment, they may raise a demand or close the case.
- Demand Notice Under Section 156: You receive this if there are pending tax dues, interest or penalties. The notice specifies how much you owe and the deadline to pay.
- Notice Under Section 142(1): This notice seeks clarification or asks for more documents related to your return. It may also be sent if your ITR was filed late or if certain income details are missing.
- Notice Under Section 139(9): Known as a ‘defective return’ notice, it points out errors like missing details or calculation issues. You must correct and refile the return within 15 days.
- Notice Under Section 148: This is sent when income has escaped assessment in earlier filings. You’ll need to submit revised information and documents for that assessment year.
- Summons Notice Under Section 131: This notice calls you to appear in person or share specific documents for inquiry. Ignoring it can lead to legal consequences.
- Intimation Under Section 245: The department sends this if it plans to adjust your current refund against any old tax dues. You have 30 days to respond or confirm the adjustment.
Reasons for Income Tax Notices to Salaried Employees
Here are common reasons why income tax notices for salaried individuals are sent:
- Mismatch in Form 16 and Form 26AS: For example, if your employer has deducted TDS but not deposited it correctly, your records may not match.
- Interest income not declared: Many salaried taxpayers forget to include savings or FD interest in their ITR.
- Claiming excess deductions: Deductions under Section 80C or 80D claimed beyond the permissible limit.
- Non-filing of ITR: If your income crosses ₹2.5 lakh but you haven’t filed returns.
- Mismatch in property transaction details: Cross-check with Form 26QB for TDS on property sales.
- TDS discrepancy: If the TDS deducted by your employer differs from what’s shown in your Annual Information Statement (AIS).
Here’s how some common income tax notices for salaried employees can show up in real life:
- TDS Mismatch: If the TDS mentioned in your Form 16 doesn’t match Form 26AS, you may receive an intimation under Section 143(1). You can fix this by asking your employer to correct the TDS details.
- Missing Interest Income: If you forget to declare interest earned on a fixed deposit, you could get a notice under Section 143(2). The solution is to file a revised return and pay the remaining tax.
How to Respond to Income Tax Notices
If you ever receive an income tax notice, don’t worry. Just follow these steps to resolve the issue smoothly:
Step 1: Read the notice carefully
Check which section it mentions, why it was issued and for which assessment year.
Step 2: Verify the notice online
Log in to the Income Tax e-filing portal and confirm it under the ‘Pending Actions’ tab.
Step 3: Match your details
Compare your income, deductions and TDS with your Form 16, Form 26AS, AIS and TIS to spot any mismatches.
Step 4: Consult your tax expert
If you’re unsure what the notice means, speak with your CA or a tax professional for clarity.
Step 5: Respond within the deadline
Most notices give you between 15 to 30 days to reply. Don’t delay your response.
Step 6: File a revised return (if required)
If there’s an error, correct it and submit the updated return online.
Step 7: Pay any dues
If you owe additional tax, clear it right away to avoid penalties or interest under Sections 234A, 234B or 234C.
Step 8: Submit your proof
Upload the required documents or explanations directly on the portal.
Step 9: Keep a record
Save both digital and printed copies of your response for future reference.
How to Avoid Income Tax Notices for Salaried Individuals
Getting an income tax notice isn’t uncommon. Small mistakes can easily trigger one. But here’s how you can avoid income tax notices for salaried individuals with these simple practices:
- File your returns on time: Don’t wait till the very last moment. Submitting early helps you avoid penalties and errors.
- Report all income: Include every earning – salary, rent, interest or side income. This ensures full transparency.
- Check your tax details: Review your income and deductions properly before filing to make sure everything adds up.
- Claim only valid deductions: Stick to genuine deductions you are eligible for and keep basic proof handy.
- Stay alert for updates: If you get any message or email from the tax department, read and respond quickly.
- Get professional advice: A quick review from a tax expert can help you spot and fix mistakes before filing.
Conclusion
When your documents are in place and your returns are filed right, you’re less likely to get any income tax notices for salaried employees. And even if you do get an income tax notice, it isn’t something to be worried about. Once you know what it means and respond on time, it’s easy to resolve the issue.
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FAQs
I was late in filing my ITR this year. Will I receive an income tax notice?
Yes, you might. The income tax notice is usually sent under Section 139(9) or 142(1). It asks why you filed late and tells you to file your return soon with any late fees.
How do I check if an income tax demand notice is real?
Just log in to the e-filing portal. Go to the ‘Pending Actions’ tab to confirm. You can also call your assessing officer. Always check your PAN, date and section before responding.
Within how many days do I need to respond to an income tax notice?
For most income tax notices for salaried individuals, you get 15 to 30 days to reply. Notices under Section 139(9) and 142(1) usually allow 15 days, while Section 245 gives up to 30 days. It’s best to respond early to avoid penalties.
