Income Tax News: Filing income tax returns can be complicated, especially for those with steady employment. To ensure compliance and reduce stress, it might be helpful to understand the various kinds of income tax notices and how to prevent them. We cover the numerous income tax notices you might get in this article and provide helpful advice on how to avoid them.
Types of Income Tax Notices for Salaried Employees
Intimation Under Section 143(1)
Section 143(1) requires the tax department to provide you an indication after your Income Tax Return (ITR) has been processed. This message outlines the department’s tax computation and indicates whether you are eligible for a refund or extra tax obligations.
Notice Under Section 142(1)
A notification under Section 142(1) may be sent to you for one of two purposes: either to ask for further information or supporting documentation regarding your filed return, or, in the event that you haven’t submitted your ITR, to remind you to do so. If you ignore this notification, you risk fines of up to ₹10,000 and/or a year in jail.
Notice Under Section 148
If there is suspicion that you have underpaid taxes or underreported your income, you are being handed this notification. It is referred to as a “income escaping assessment” notification and is issued by the tax authorities if they find disparities in the income you have declared.
Notice Under Section 139(9)
You will get a faulty return notice, also known as a notification under Section 139(9), if your submitted tax return has mistakes or inconsistencies. Within 15 days of receiving the notification, you must file a revised return and correct these inaccuracies.
Notice Under Section 143(2)
A notice under Section 143(2) indicates that your return has been chosen for further examination. This implies that in order to confirm the correctness of your income declarations, tax payments, and loss claims, the tax department will thoroughly review them.
Notice Under Section 156 (Demand Notice)
You will get a demand letter under Section 156 if you owe money on taxes, penalties, or fines. You have 30 days from the date of this notification to pay the stipulated sum.
Notice Under Section 245
A notice under Section 245 will be sent if you owe money on unpaid taxes from prior years and are eligible for a refund this year. The purpose of this notification is to inform you that the tax department plans to deduct the unpaid taxes from your refund. You’ve got thirty days to reply to this notification.
How to Handle Income Tax Notices
Comprehensive Review of the Notice
Start by carefully reading the notice to understand the reasons for its issuance as well as the particular issues raised. This will assist you in identifying the necessary steps.
Compilation of Necessary Documentation
Assemble every necessary documentation, including bank statements, investment evidence, Form 16 and 26AS, and your income tax returns. These materials will assist you in responding to the notice’s questions.
Adherence to Deadlines
Keep a careful eye on the notice’s indicated response deadline. It is imperative that you respond within this timeframe in order to prevent additional issues or fines.
Submission of Supporting Evidence
Include all necessary supporting documents with your response. Ensure these documents are well-organized to facilitate the reviewing officer’s verification process.
Consultation with Tax Professionals
If the notice appears complex or you are uncertain about how to proceed, seek advice from tax professionals. They can offer valuable insights and guidance.
Monitoring of Response Submission
If you respond online, monitor the submission process to ensure you receive an acknowledgement or response from the tax department.
Vigilant Follow-up
Stay proactive in checking your email, tax portal, and other communication mediums for any follow-up correspondence or additional notices from the tax department, ensuring you address them promptly.
Tips to Avoid Income Tax Notices
Timely and Accurate Filing
Ensure you file your income tax returns within the prescribed deadline. If you miss the deadline, file a belated return as soon as possible to minimize the risk of penalties and notices.
Reconcile with Form 26AS
Regularly cross-check the details in your ITR with the information in Form 26AS. Discrepancies between these documents are common triggers for tax notices.
Organize Financial Documentation
Maintain a systematic record of all your financial transactions, including income, expenditures, and relevant receipts or documents. This organized approach will be invaluable in case of an audit.
Seek Professional Guidance
Navigating the complexities of tax laws can be daunting. If your tax situation is intricate, consult a tax professional or chartered accountant.
Prompt Response to Notices
Should you receive any communication from the tax authorities, respond swiftly and adhere to their guidelines. Ignoring such notices can escalate to more severe penalties.
Report All Income Sources
Diligently report earnings from all sources to avoid the implications of underreporting. Overlooking significant income streams is a common mistake that can attract scrutiny.
Document Deductions and Exemptions
Maintain accurate records of all the exemptions and deductions you claim on your tax returns, together with any supporting documentation. To validate your claims, the tax department could ask for certain records.
Salaried employees can successfully manage their tax responsibilities and reduce the likelihood of obtaining unwanted income tax notices by adhering to these tips.
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