Mismatch in TDS amount between Form 26AS and what is claimed in the tax return, or a mismatch in salary numbers based on Form 16 are some of the common reasons for such a notice.
Any communication from the Income Tax Department though email or otherwise is bound to give sleepless nights to many taxpayers. Of late, several taxpayers have been receiving communication from the I-T Department wherein one is asked to pay an amount as low as Rs 10, and in some cases as low as Rs 4 and Rs 7. “Since most of the notices, especially those under Section 143, are system generated, sometimes a notice may be received for small amounts also,” says Archit Gupta, Founder & CEO ClearTax. The communication received by the taxpayer is not exactly a notice, but an intimation from the I-T Department.
The I-T Department carries out a preliminary assessment of all the returns filed and intimates taxpayers the result of such preliminary assessment. Such intimation to the taxpayers post preliminary assessment is called ‘Intimation under Section 143(1)’.
Why intimation under Section 143(1): Once the I-T return is filed by the taxpayer, a computerised preliminary assessment is carried out by the I-T Department in which data between the I-T return and that available with the department collected through Form 26AS, Form 16, Form 16A and other TDS returns are matched. Based on this, any apparent mistake or arithmetical error, if any, is intimidated to the taxpayer under Section 143. “Mismatch in TDS amount between Form 26AS and what is claimed in tax return, or a mismatch in salary numbers based on Form 16 are some of the common reasons for such a notice,” informs Gupta.
In case any tax or interest is found payable or refundable, the I-T Department sends an intimation under section 143(1) to a taxpayer.
What if the amount is high: In case the amount payable is higher, one should take immediate action on such an intimation. Here is what Gupta suggests – “Ideally, one should first check the date of the notice and the relevant assessment year and financial year. Then verify all the amounts as per tax return filed and the income tax department, see where the discrepancy is. If the tax department is correct, any taxes due must be immediately paid with interest. In case the taxpayer does not agree with the department, a suitable response must be sent.”
Whose mistake: In case, the mistake is at your end, they may be rectified by you by filing a revised return and paying taxes, if any. However, in case the mistake has been at the I-T department end, the taxpayer can intimate the mistake to the income-tax authority through the online rectification application under Section 154(1) intimating the correction of mistake appearing in Section 143(1) intimation.
What to do: But, what if the amount is in low single digits and what could be the cut-off below which the taxpayer may sit pretty and take no further action? “For amounts less than Rs 100, usually no action is required by the taxpayer. In case demand is raised, the department will make a request for payment, on which interest will be charged. Such a due amount if not paid, may be adjusted against refunds in future years,” says Gupta.