New Income Tax Rules: What’s Changing from April 1, 2025
New Income Tax Rules: What's Changing from April 1, 2025 The Finance Act 2024 introduces significant amendments to the income tax framework, set to take effect from April 1, 2025.…
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Six Income Tax notices that a salaried individual may receive
1. Section 143 (1) notice: Intimation notice
After the income tax department processes the ITR, the individual receives this notice. The notice lets the person know if his ITR computations agree with the income tax department’s. In the event that there is a discrepancy, this notification will specify whether further taxes are owed or a refund is due. This notice will be sent to the individual even in the absence of any inconsistency or error in the ITR.
After the financial year in which the ITR is provided under Section 139 ends, or in response to a notice under Section 142 (1), the intimation notice under Section 143 (1) will be sent out within nine months. The notification of intimation will be sent on or before December 31, 2024, for ITR filed for FY 2022–23 (AY 2023–24).
You are not required to reply if the notice of intimation is given because of a refund or if there is an error in the tax department’s computation and yours. However, in the event of a tax demand, the taxpayer is required to reply, indicating whether or not they agree with the suggested adjustment, within 30 days of the date the notification was sent.
2. Section 139(9): Defective ITR
When an ITR is filed with errors, a notice under section 139(9) of the Income Tax Act, 1961 is sent. This tax notice, which the assessee must remedy by filing an amended ITR, will be sent by the tax department.
1. Tax exemption on housing allowance claimed in the ITR; nevertheless, the wage breakdown does not reflect the HRA component.
2. TDS on income that was declared when submitting an ITR but was not reported. For instance, TDS has been claimed but the salary from a prior employment is not included in the ITR form. on a similar vein, TDS has been claimed but FD interest was not disclosed on the ITR form.
Within nine months following the conclusion of the fiscal year in which the return is filed, an income tax notification pursuant to section 139(9) may be issued. Therefore, the tax department may send a notification on or before December 31, 2024, for an ITR submitted for FY 2022–23 (AY 2023–24) with a deadline of July 31, 2023.
A person receiving a tax notice will be made aware of the deadline for responding. Individuals are typically given 15 days to respond to tax department requests.
3. Section 142: Inquiry before scrutiny assessment
This notification is being sent because the income tax department is trying to find out why the individual did not submit an ITR even though they made more money than the basic exemption and there was proof of many sources of income in AIS, among other things.
If, as per section 139(1), no tax return has been filed, the assessee taxpayer may be subject to notice under section 142(1) compelling him to provide one.
Additionally, a notification of this kind may be sent out requesting that the assessee provide any information on the subject in writing and produce any accounts or documents needed to complete an assessment.
A person must respond to all of the tax department’s inquiries via notices issued under section 142(1) and submit the necessary information and supporting documentation for any claims made in ITRs filed by the deadline specified in the notification.
Section 142 (1) specifies no time limit at all for the issuance of notices.
The notification itself will specify the deadline for replying to it. The income tax department typically gives you 15 days to answer, according to tax experts.
4. Section 143 (2): Scrutiny assessment
The purpose of this income tax notification is to encourage the salaried individual to thoroughly review their ITR and verify the accuracy and sincerity of the income and deductions they have claimed.
The individual would receive notice under section 143(2) of the Income Tax Act, 1961, in order to conduct a scrutiny assessment pursuant to section 143(3).
This kind of notice typically includes a list of documents that the recipient must submit, along with a questionnaire. The tax notice can be responded to online. This examination process will continue until the income tax department is satisfied that the individual has satisfactorily and honestly responded to all of its inquiries.
After the ITR is chosen for examination, notice may be sent in accordance with section 143(2) “within three months from the end of the financial year in which the return is filed. The tax agency may deliver this notice on or before June 30, 2024, for FY 2022–23 (AY 2023–24).
The notice itself would provide the deadline for responding to such a notification. All you have to do is upload the required documents and send your response to the assessing officer.
Generally, the time limit is 15 days to respond to scrutiny notice.
5. Section 148: Income escaping assessment
When the assessing officer (AO) learns of any information indicating that a particular individual’s income may have avoided assessment in the prior year, they will issue this tax notice. This indicates that a person’s prior year’s ITR may not have included certain income.
The income-tax department will give the person a show-cause notice under section 148A(b) prior to issuing a notice under section 148. The purpose of this show cause notice is to explain why a certain ITR was chosen for reevaluation.
People will have the chance to explain why they believe reassessment procedures shouldn’t be started. The evaluating officer may decide to close the case or proceed with the reassessment process based on the information that the person has submitted.
The amount of money that has avoided assessment determines how long it takes to issue a notice under this clause. If income is less than Rs 50 lakh, the tax notice will be sent out within three years after the conclusion of the applicable assessment year.
However, if the income exceeds Rs. 50 lakh, the submitted ITR may be reassessed up to ten years after the relevant assessment year with the designated tax authority’s prior consent.
The notice will specify when responses must be made. The tax authority typically gives you 30 days to reply to the tax notice.
6. Section 245: Adjustment of tax payable with refund amount
Refunds of income taxes owed for a specific year may be deducted by the income tax department from an unpaid demand from prior years. This adjustment is only made in the event that there are unpaid income tax bills or unpaid tax refunds for the current year.
If the income tax department plans to amend the taxpayer’s current year’s income tax refund with any outstanding tax demands from prior years, the taxpayer may receive a notification notice under section 245.
Should you object to this letter in any way, or if the outstanding demand has already been paid, the taxpayer should reply with proof of payment and a request that the department not proceed with the proposed adjustment.
Section 245 gives no time limit for the issuance of this tax notification. This means that a tax officer may set off a refund with an outstanding demand if, according to the income tax department, a taxpayer has an outstanding tax demand for FY 1999–2000 (AY 2000–01) and a tax refund due for FY 2022–23 (AY 2023–24).
The notice itself will specify the deadline for responding to it. People usually have 30 days from the date the notification was issued to reply.
The income tax department will review your response to this tax notice and determine whether you agree with the tax demand or oppose to it.
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