Getting an income tax notice can be unsettling. The sudden ping of a government email or a formal letter marked “Income Tax Department” often triggers anxiety, especially for first-time filers. But here’s the truth—not every tax notice means trouble. Many are routine, and most can be resolved easily if you understand why you received them and how to respond correctly.
With over 1.36 crore Income Tax Returns (ITRs) already filed for FY 2024-25 as of July 17, and more than 1.12 crore processed, the Income Tax Department is working swiftly. The rise in compliance also means a higher number of people are encountering automated or review-based tax notices.
Let’s break down what these notices mean, why you might receive one, and how to handle them calmly and smartly.
Why You Might Get an Income Tax Notice
Notices can be triggered by a variety of reasons. Some of the most common include:
- Mismatch in Form 26AS/AIS and ITR: For example, your employer deducted TDS, but it isn’t reflected correctly in your return.
- High-value transactions: Buying property, investing in shares, or depositing large cash sums might invite scrutiny.
- Claiming excessive deductions or exemptions
- Failure to file returns despite having taxable income.
- Random scrutiny under routine assessment norms.
6 Common Types of Income Tax Notices & What to Do
1. Intimation Notice (Section 143(1))
- Purpose: Routine intimation after your ITR is processed. It highlights any minor mismatch or confirms the return as filed.
- What to do: If the data is correct—relax. If there’s a mistake, revise your return or respond through the portal.
2. Defective Return Notice (Section 139(9))
- Purpose: Your return has missing or incorrect information.
- Why it happens: You might have chosen the wrong ITR form, skipped income entries, or made a typo.
- What to do: Rectify and resubmit within 15 days (or as per the timeline given).
3. Reassessment Notice (Section 148)
- Purpose: The tax department believes you missed reporting income.
- Why it happens: Unreported high-value transactions or red flags in bank/investment statements.
- What to do: Respond within 30 days with evidence. If the income was reported, provide supporting documents.
4. Notice for Non-Filing (Section 142(1))
- Purpose: You’ve not filed ITR even though financial activity suggests you should have.
- What to do: File your ITR immediately if required. If not liable, respond with a clarification.
5. Late Filing Penalty (Section 234F)
- Purpose: You missed the ITR filing deadline.
- Penalty: Ranges from ₹1,000 to ₹5,000.
- What to do: Pay the fine and file your return as soon as possible.
6. Tax Demand Notice (Section 156)
- Purpose: You owe tax due to miscalculation or disallowed deductions.
- What to do: Pay the demand within 30 days or appeal it if you believe it’s incorrect.
Common Mistakes That Can Make Things Worse
- Ignoring the notice or responding after the deadline
- Submitting incomplete or wrong responses
- Failing to maintain supporting documents
- Not reconciling Form 26AS/AIS before filing
Smart Ways to Deal With a Tax Notice
- Read the notice carefully: Check PAN, assessment year, and reason.
- Match data with Form 26AS and AIS: This can often explain the mismatch.
- Collect supporting documents: Salary slips, bank statements, Form 16, and investment proofs.
- Respond through the Income Tax portal: Or consult a chartered accountant for guidance.
Tips to Avoid Getting an Income Tax Notice in the Future
- File your ITR on time and verify it online.
- Cross-check Form 26AS, AIS, and TIS before filing your return.
- Declare all income, including side gigs or interest earnings.
- Keep records for at least six years.
- Consult a tax expert for complex returns or high-value transactions.
Tax Compliance Culture is Rising in India
With more than 13.12 crore registered users on the Income Tax portal, India’s taxpayer base is expanding, and so is the government’s push for transparency and digital compliance. The early processing of returns and the ease of online interaction have made resolving notices quicker and more streamlined than ever before.
Receiving an income tax notice isn’t the end of the world—it’s often a small nudge to check and correct your filing. Stay calm, read the notice carefully, and act on it. Whether it’s a minor discrepancy or a more serious query, the right response at the right time can resolve most issues without penalties or legal trouble.
And remember: Your honesty and promptness are your best tools to stay tax-compliant and stress-free.
