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Know what is Tax Demand Notice and how to reply it

What is Tax Demand Notice and how to reply it?


tax demand notice india

Individuals whose yearly income exceeds the exemption level are required to file income tax returns annually for each fiscal year. For the fiscal year 2022–2023 (AY 2023–2024), the ITR filing deadline was July 31, 2023.

The tax declarations are examined by personnel from the Income Tax Department when the returns are filed. The agency issues a "outstanding tax demand" or Income Tax demand notice notification if there are any discrepancies in the information. To avoid penalties or perhaps legal action, you must respond to a tax demand notice within the deadline specified on the notification.

Before learning how to reply to an income tax demand notice, let's go over some of its key features. 

A tax demand notice: What is it?

Even if income tax returns are submitted on time, there is a potential that the I-T Department will send a notice requesting a correct response from taxpayers. This generally occurs when the information provided in the returns conflicts with the income tax officer's determination.

The notice is being sent out in accordance with many sections of the Income Tax Act of 1961, including Sections 143(1), 143(2) for Scrutiny, and Section 148 for underreporting or failing to submit all of one's income.  

Notice Refunds may be offset against the balance of the tax due under Section 245 of the Code.

If a demand for interest, a penalty, a fine, or any other amount occurs, Section 156 of the I-T Act requires the issuance of a demand notice. 
 

How should I react to a tax demand letter? 

The Income Tax Department's website is where taxpayers may submit pertinent comments to such demand notifications. The processes to respond to a demand notice are as follows:  

1. Go to the official website, www.incometaxindiaefiling.gov.in, and log in to the e-filing portal.

2. To examine a list of outstanding demands, click on "Pending Actions" and choose "Response to Outstanding Demand." 

3. After that, choose the appropriate response based on the circumstance by clicking "Submit Response." 

The following choices are available to taxpayers, per the department:

1. Demand is accurate 

After selecting "Demand is accurate," you must click "Submit" to "Confirm" your selection and finish the answer submission procedure.

Demand is partially right: If you select this option, you must input the "Amount which is correct," and the "Amount which is incorrect" will be filled in automatically.

2. Disagree with demand

After selecting "Disagree with demand," you must fill out all the required fields, choose the proper reasons from the list, attach the required supporting documents, and then "Submit" your response.

3. Demand is incorrect but you agree to an adjustment

After selecting "Demand is incorrect but you agree to an adjustment," choose the relevant reasons from the list, fill out all the necessary areas, upload the required supporting documents, and then click "Submit."

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