Income-tax returns: Received a tax notice from the I-T department? Here’s what you should do — Stepwise guide

The process to file your income-tax returns (ITR) is now also available online but may still be confusing for some first-time taxpayers. Today we look at what you should do if you receive a tax notice from the I-T department.

What is an I-T notice?

An I-T notice is a formal communication from the tax department which is sent for a number of reasons either before or after you file returns. It does not automatically mean a taxpayer is in default and could simply be sent for correction of mistake(s) in your documentation.

It is advisable to first verify the authenticity of a notice before you respond. This can be easily done through the authentication feature on the official income-tax e-filing portal here (https://www.incometax.gov.in/iec/foportal/). You will need to keep you PAN Card, tax documents, Document Identification Number (DIN), and phone ready for the process.

What are the types of tax notices?

Once you have verified that the tax notice is genuine, check for the Income-Tax Act section referred to in the communication to understand what prompted the action. It is best to respond promptly to avoid penalties.

• Section 142(1): Inquiry before assessment
• Section 143(1): Intimation letter
• Section 143(2): Notice for scrutiny of assessment
• Section 148: Notice for escaping assessment
• Section 245: Demand notice for taxpayer

What should you do when you receive an I-T notice?

• Read through the notice, check the section and understand what is being asked of you.

• Based on the request or demand, you must gather necessary documents and related records to be submitted to the I-T department. This could include your bank statements, Form 16, investment proof, ID proof, transaction details, etc.
• Log into your account on the I-T portal and click on Pending Action, followed by e-Proceedings.
• The notice will load and you can respond to it with your explanation and the required supporting proof documents.
• Once you submit your reply, the acknowledgement can be download to your device for future reference and proof.

• Ensure that your response is prompt and track the website / email for follow-up communication from the tax department.
• Alternatively, if you have a financial advisor or Chartered Accountant, inform them of the notice and they will handle the process for you.

What are the common reasons for an I-T notice?

• Non-filing of ITR,
• Use of incorrect ITR form when filing your returns,
• Misreported or incorrect TDS amount in ITR,
• Inaccuracies in your ITR,
• Random assessment of ITR filing by an officer,
• Failure to declare any income during the fiscal / assessment year in ITR,
• Oversight in submission of relevant papers with ITR,

• Non-disclosure or misreporting of capital gains during the fiscal / assessment year in ITR.
• Failure to correctly report investments for self, spouse or children, non-disclosure of high-value transactions during the fiscal / assessment year in ITR.

Which ITR form should you choose?

• ITR-1 form: Individual with income from salary, one house property, and other sources.
• ITR-2 form: Individual or Hindu Undivided Family (HUF) without business income.
• ITR-3 form: Individual or HUF with income from business or profession.
• ITR-4 form: For presumptive income from business or profession.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.