Guidelines for Income tax

How to Respond to the Income Tax Department Notice?

It is a norm for people in India to file income tax returns (ITR) every year. However, once you file the income tax return, you need to verify them carefully.

It is because once you are done with that, the Income Tax Department checks the submitted details or information given by you. It includes all details about the income tax paid and income declarations.

If there are no issues in the cross-checking of the discussed details, then the department accepts your Income Tax Return (ITR) as per Section 143(1).

However, if they come to know that you have paid less tax than what you should have paid, you may get a demand notice. Most of the taxpayers feel nervous when they receive a word from the Income Tax Department. It is because they are unaware of the steps involved in responding to the Income Tax Department notice.

In the context of the same, here is a quick post that will help you get to know the step-by-step method. It will assist you to decode the response to an IT Department notice. Have a look:

A step-by-step guide to responding to an IT department notice

Have you received a demand notice from the Income Tax Department? Here are some steps how to correctly respond.

How to respond tax notice

Step 1 – The first step is logging to the website www.incometaxindiaefiling.gov.in with your user ID, password, and date of birth

Step 2 – Once you are on the website, you should click on ‘E-file’ and then land on ‘Respond to outstanding tax demand’ tab. After you reach there, you will see the details such as:

  • Year of the assessment
  • Section code
  • Demand notification reference/number
  • Date of issue of the demand
  • Outstanding demand money/amount/figure
  • Uploaded by
  • Rectifications rights
  • Response – view and submit

Step 3 – Click on ‘submit’ for the applicable assessment year. You will see three options, and you would need to select one out of them such as:

  • The demand is correct
  • The demand is partially correct
  • Disagree with the demand

Options to reply to demand notice

When you select the ‘demand is correct’, a pop-up window comes up with a message. Once you are fine that the demand is correct, you can’t disagree with it. Click on submit button and a success message should notify you about the submission.

Income tax

When you select that the ‘demand is partially correct’, you will need to provide with an amount that is correct as per your perception. If you enter an incorrect amount, you will need to fill one or more reasons mandatorily such as:

  • Demand has already been paid by you
  • Demand is reduced by revision/modification
  • Demand already reduced by an appeal/order but the appeal of effect needs to be given by the department
  • Appeal filed/stay petition filed or stay permitted or installment granted
  • Rectification return filed at the Central Processing Unit (CPU), Bengaluru
  • Modification filed with the assessing officer

Don’t agree with the demand? Then you would need to provide the particulars of your dissimilarity and support it with the valid reasons.

We hope that the discussed information will surely now help you respond better to a response from the Income Tax Department. If you don’t know how to calculate your income tax, you can also take the help of an online tool. It is none other than the income tax calculator which is available on all finance websites/apps free of cost.

You may also get in touch with a known income tax expert. It will help to get to the core of calculating the income tax along with responding to the IT department notice. All the best!