The deadline to file tax returns is over and individuals are busy receiving their refunds. However, it is likely that in place of a refund you would have received an income tax notice demanding additional tax.

There are a number of reasons why you would receive an Income Tax Notice. Here are some possibilities on why there could be a notice:

1) Failed to file your returns for the previous years

You would not get a notice for filing income tax this year, but, if they remain un filed for the previous years. The real problem is that many individuals decide not to file returns if there is a TDS that is already deducted by the employer.

This should never be the case. Even if there is a TDS that is deducted by the employer, you need to file your tax returns. You need not file one, if your taxable income is below Rs 2.5 lakhs and you have no refund to claim from the IT department.

If you have failed to file your tax returns for the previous years like assessment year 2010-11, assessment year 2011-12 or assessment year 2012-13 you may get a notice from the IT authorities.

2) Difference in TDS deducted and TDS shown

If there is a difference between the TDS that has been deducted and TDS that is shown you may get an income tax notice. For example, if the TDS in form 26AS shows Rs 25,000 as TDS cut and you are claiming Rs 26,000 you are likely to be asked for a clarification.

3) Non disclosure of income

Sometimes, you may altogether omit an income like interest from savings bank account. For example, it is highly unlikely that you would not be receiving interest from your savings account. Hence, it is prudent to show these in the Income Tax Returns (ITR). Sometime we fail to show the same, which could lead to a notice from the IT authorities. There are many tax free incomes like dividends, which are tax free, but, which must be declared.

How To Reply To An Income Tax Notice?

a) If you are confident of your returns

If you have received a notice and are confident that the returns were filed correctly, you may want to meet the assessing officer and reply to the income tax notice accordingly.

2) Seek professional help

If the matter is slightly more complicated you might want to seek professional help. A Chartered Accountant may help in resolving issues, if they need special attention.

3) In case of not filing past tax returns
In case you have not filed income tax returns of the previous years, it would be more prudent to do the same. It maybe a little tedious to collate data pertaining to the previous years, but, it would be worthwhile to do so.

Conclusion

It is good to respond to the income tax notice quickly for any clarification. Do not delay a reply. Seek professional help where necessary.

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