Introduction
A formal notification from the tax authorities about a person's or entity's tax matters is an income tax notice. These notifications are issued by the Income Tax Department (ITD) and may be in response to audits, requests for more information, inconsistencies in tax returns, or unpaid taxes Finding out what an income tax notice is and how to respond to it correctly are important things to know, even if receiving one can frequently cause anxiety or bewilderment. In this article, we will discuss the typical causes of income tax notices, the significance of responding to them right away, and the possible repercussions of non-compliance. For both individuals and businesses to properly navigate the tax system and maintain compliance, they must comprehend income tax notices.
Know the Reasons for Income Tax Notice
An income tax notice may be received for several reasons. Here's a list of the most common ones:
- If the taxpayer neglects to file his income tax return by the deadline and it is received by the income tax department (ITD). The notice that has been communicated is known as an ITD notice.
- In the case that the taxpayer's stated income and that of his employer differ in any way (for salaried individuals)
- In the case that any mistakes, omissions, or discrepancies-such as missing credits, deductions, or income sources-are present in your income tax return,.
- If the Department of Income Tax suspects that someone is underreporting their income to avoid paying taxes,.
- If the taxpayer is unable to pay all taxes due, take into account both his income and his deductions.
- If there are any differences between the taxpayer's reported TDS or TCS information and the information available with the Income-tax Department
- If the taxpayer has engaged in any high-value financial activities that are scrutinized, such as significant cash deposits, Property purchases, or overseas remittances,
- Under Section 143(2) or Section 148, the Income tax department decides to assess or reassess a taxpayer's income
How Should You Proceed Upon Receiving a Income Tax Notice?
After receiving an income tax notice, the taxpayer needs to do the following:
- Read it carefully to find the reason why it was sent.
- Verify if it has the correct name, PAN number, and address.
- Identify any discrepancies that may have led to a notice in the income tax return.
- Within the allotted time, reply to the ITD notice.
- When filing the response, be sure to include all necessary details and supporting documents.
- Additionally, use the Income Tax Portal to view IT notices, or income tax notices, online.
How to Authenticate an Income Tax Notice?
For notices, orders, and letters issued for AY 2011-12 and later years only, the taxpayer can authenticate using PAN, document type, assessment year, issuance date, and mobile number.
The steps to verify an IT notice or an online income tax notice on the income tax site, are as follows:
Step 1: Visit the portal www.incometax.gov.in
Step 2: Choose "Authenticate" from the "Our Services" menu on the home page.
Step 3. A new web page will be displayed on your computer. There are two options that you can authenticate the documents you receive. You can certify the document using DIN, PAN, notification section, year of assessment, month, and year of issuing. You will be required to submit your mobile number in both scenarios If you chose the first option-PAN by assessment year-then choose that option and provide the necessary information, including the mobile number. However, if you select the second option, you will be required to provide both your mobile number and the DIN that is specified on the notice.
Step 4: One-time password (OTP) will be sent to your mobile number. The OTP received will only be valid for 15 minutes.
Step 5: Click "Continue" after entering the OTP. If the notice or order that was sent to you is genuine, it will show up on the website after the OTP has been authenticated. The website will display the message: "Yes, the notice is valid and issued by the Income Tax Authority." If the notice sent to you is not true, the website will display "No such record was found for document number/given criteria. The taxpayers will benefit from this facility as they deal with the issue of fraudulent notices. This feature provided by the e-filing portal can be used to verify the authenticity of documents or communications received from the department or any order issued by the tax
Conclusion
Receiving an income tax notice doesn't have to be frightening, either. The following steps can easily verify and authenticate the notice online:. This guarantees that you resolve any inconsistencies or problems brought up in the notification by acting in a timely and suitable manner. In addition to this, the IncomeTax Penalty Chart specifies that a penalty can be imposed, the nature of the default, and the amount of the penalty levied. Knowing the consequences of non-compliance also enables you to keep accurate records and avoid unnecessary penalties.
It is always advisable to consult a tax expert if you have any specific questions or need further assistance. To successfully handle the tax process, stay informed and compliant.
The author is an author, director, and operations manager at Ebizfiling India Private Limited, and has led a team of 50+ professionals in CA, CMS, MBA, and retired bankers. Apart from individual experience in almost every facet of statutory compliances, law, and taxation. She can also be reached at info@ebizfiling.com.
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