A few days ago, I got a notice from Income Tax Department. Notice subject was "Non filing of Income Tax Return - Reg". It was pretty unsettling for me. Also, my income was not taxable at that time. In this article, I will explain how I responded to my notice and share step by step guidance about how to handle Income Tax Department notice when income is nontaxable? and what I did after notice? During response process, I took help of my Chartered Accountant.
If Income Tax department of India sends a notice letter to you about "Non filing of Income Tax Return" that means the Income Tax Department wants you to explain why you haven’t e-Filed your return and may additionally ask you to explain some facts regarding your transactions.
Why did I get this notice? - Reasons
I was shocked as about 2 years ago (given a financial year in the notice) my income was below the taxable limit. So the same question got into my head Why? Why me?
The income tax department has been capturing information on financial transactions/activities relating to you through Non-filers Monitoring System (NMS). During notice shown financial year the Income Tax Department has received information on my financial transactions/activities. Those activities were -
|Information Code||Information Description|
|TDS-192A||TDS Return - Salary to Employees (Section 192A)|
|STT-03||Sale of equity share (Settled otherwise than by the actual delivery or transfer) in a recognised stock exchange|
Let's look deep into this information codes and information description.
- I worked for a company for 2 months before starting my own.That company paid my salary and deducted TDS (Tax deducted at source) So that tax transaction can be seen as TDS-192A.
- During that tax year, I did some trading on the share market. When you buy/sell shares STT (Security Transaction tax) gets cut on each order. Those transactions also got recorded on PAN as STT-03.
On the basis of this information, they asked through the notice that why I didn't file income tax return. Income tax department didn't know that my income was not taxable.
What did I do after getting this notice?
I started gathering of information and documents about those two transactions.
For TDS-192A TDS Return - Salary to Employees (Section 192A)
I visited http://incometaxindiaefiling.gov.in. Logged into account (My account was already created during my previous return filing. If you do not have account please register yourself and create new.)
For checking details of transactions for TDS-192A, I clicked 'View form 26 AS (Tax Credit)'.
On next page when I clicked on continue then page redirected to TRACES (TDS Reconciliation Analysis and Correction Enabling System). On this page, I clicked on link "View Tax Credit (Form 26AS)"
On TRACES website I selected assessment year that shown in the notice and downloaded all details as PDF.
In that PDF I got to know that my old company deducted TDS from my salary back then in that financial year.
For STT-03 Sale of equity share (Settled otherwise than by the actual delivery or transfer) in a recognised stock exchange
I called my broker and asked for transaction statement for that financial year. In the statement, I got to know that I traded some stocks during financial year.
How did I replied to notice online?
Doing this was a fairly simple task for computer geeks. Here’s an in-depth illustrated guide on how I replied to notice online.
1. Went and logged in to https://incometaxindiaefiling.gov.in/ (Create an account if you don't have one.)
The Income Tax Department has a module in its menu called “Compliances”. Clicked on it.
2. Then I have selected ''ITR has not been filed" in response and selected "No taxable income" in reason. Added remarks as total income was below taxable income
3. And then in related information summary tab, I selected Self-Income from transaction is below taxable limit for both transactions.
After submission I got my compliance acknowledgement like this -
What did I do after the online response?
I printed the acknowledgment. Also, I have attached some documents related to transactions/activities like Tax credit form for TDS and Transaction statement of the broker of that financial year.
Visited my tax officer office (Address was on notice). And filed that compliance acknowledgment at tax officer.
And finally, it is Done!
Important Note :
You might get notice with other transactions or activities so you need to furnish your response according to those activities. Also while responding to compliance module please take help of Chartered Accountant if you are not sure what to do.
While I was at income tax office, one tax associate told me
Always file income tax return even if your income is below taxable limit.