Filed your taxes? Now, what to do if you get a notice?

After filing your ITR, you need to either e-verify it or send the signed copy of ITR-V to the CPC within 120 days (30 days for returns filed on and after August 1, 2022) of the date of filing to complete the process from your end.

Once you verify the return, you get an email confirming the receipt of return. Following this, the processing is initiated and in the first step, the submitted return is checked for mistakes and discrepancies.

“This is a completely automated and computer-generated process in which the data given by the taxpayer is compared with the details available to the income tax department. In case of any discrepancies in arithmetical errors, internal inconsistencies, tax calculation and tax payment verification, then intimation under Section 143(1) is sent to the taxpayer,” said Deepak Jain, chief executive, TaxManager.in, a tax e-filing and compliance management portal.

There is a limit to sending such notices. “The intimation letter under Section 143(1) cannot be sent after expiry of nine months from the end of financial year,” said Yeeshu Sehgal, head of tax markets, AKM Global, a tax and consulting firm.

Also read: Moneycontrol's guide to filing income tax returns 

Act, reply or just keep quiet?

You are not required to act or reply on each and every intimation.

In general, an intimation is just a formality and you do not have to do anything. “After receiving intimation, the taxpayer should check the reason for receiving it and the details of return filed by the assessee and computation contained in the intimation letter,” said Sehgal.

If the I-T department has pointed out a discrepancy, it’s always better to go back and check your own I-T calculations or get your chartered accountant to look into it immediately.

An intimation email comes with an attached statement, which has two columns—one will have the details as per the return filed by you and another will have details as computed by the department.

There are three possible scenarios—no difference between the return you filed and what the department computed; you need to pay some additional tax; there is a tax refund.

In case there is a shortfall in the taxes that you had paid earlier, the letter will clearly say at the top, “You have a demand for AY 2022-23.” AY stands for assessment year, the year in which you file your return and pay your taxes on income earned in the previous year.

If the information regarding source of income, total income and tax paid provided by you in the ITR and information available in the IT department’s database matches, you are not required to respond on receiving intimation under Section 143 (1).

Also read: Mistakes to avoid while filing income tax returns 

What if there are differences?

In case of a difference between the return filed and data available with the department, there are two possibilities—either you need to pay additional tax or you should get a refund. “If the taxpayer agrees with the tax demand raised by the income tax department, then the extra tax can be paid with the help of pre-filled challan sent along with the notification,” explained Jain.

Additional tax liability may arise because of various reasons, such as in case you missed reporting certain income or claimed higher deductions compared to what you were actually allowed.

If you agree, you must pay the entire tax demand within 30 days of receipt of this intimation or as stipulated in it. Once you pay the tax, submit the copy of the challan to your ward or send a softcopy online to the tax authorities.

However, if you do not agree to the tax demand raised or income computed by the I-T department, you can file a rectification request under Section 154, along with supporting documents.

On the other hand, if you are lucky and the intimation shows that you have paid more tax than what is actually required according to the I-T department’s calculation, then it will show a refund amount, which will be returned to you.