What to Do After Receiving an Income Tax Notice? TaxBuddy’s Step-by-Step Process
- PRITI SIRDESHMUKH
- Dec 1
- 8 min read
Receiving an income tax notice often signals mismatches, omissions, or verification requirements flagged by the Income Tax Department. Immediate action helps prevent penalties, delays, or escalations. A structured approach—starting with understanding the notice type, verifying authenticity, gathering documents, and submitting the right response—ensures smooth resolution. TaxBuddy simplifies each stage with guided workflows, expert-backed checks, and accurate document handling aligned with the Income Tax Act, 1961 and updates for FY 2025–26.
Table of Contents
Understanding Different Types of Income Tax Notices
Income tax notices are issued for specific reasons, and understanding the intent behind each one determines the next steps. A notice under Section 143(1) usually points to mismatches between your filed return and data reported in AIS, TDS statements, or Form 26AS. A notice under Section 139(9) indicates a defective return requiring correction. Section 131 or 133(6) notices seek information or clarification about high-value transactions. Scrutiny notices under Section 143(2) aim to examine detailed income disclosures, while demand notices highlight outstanding tax liabilities. Recognising the type and its purpose helps avoid unnecessary panic and allows a structured, compliant response. TaxBuddy’s platform automatically identifies the notice category and explains its implications clearly, reducing errors in interpretation.
How to Authenticate an Income Tax Notice
Authenticating a notice ensures that communication genuinely originates from the Income Tax Department. The details such as the Document Identification Number (DIN), issue date, and sender’s email domain must match those listed on the e-filing portal. The Income Tax Department’s “Authenticate Notice/Order” utility allows verification using the DIN or PAN details. TaxBuddy’s verification tool offers a simpler approach by cross-checking the notice against official databases and confirming its legitimacy instantly. Authenticity must be established before submitting any documents or explanations to safeguard against phishing attempts and misinformation.
Documents Required Before Responding to a Tax Notice
Accurate documentation forms the backbone of a successful notice response. Key documents usually include filed ITR copies, Form 26AS, AIS/TIS reports, Form 16, TDS certificates, bank statements, capital gains reports, investment proofs, rent receipts, and business income records where applicable. Additional records such as loan statements, housing documents, or foreign income disclosures may be required depending on the notice. Proper organisation of these files helps address mismatches, reconcile reporting gaps, and substantiate claims made in the return. TaxBuddy’s document management system allows uploads directly within the notice resolution dashboard, ensuring all supporting documents remain securely stored and easy to reference.
Choosing the Correct Action After a Tax Notice
After reviewing the notice and gathering documents, selecting the correct response determines the accuracy of compliance. If discrepancies exist in the originally filed return, a revised return under Section 139(5) may be necessary. Errors could include incorrect income reporting, missing deductions, or incorrect bank information. When the notice seeks clarification instead of correction, a justification note supported by documents may suffice. In cases where mismatches arise from third-party reporting errors, such as incorrect TDS entries, explanations supported by bank proof or employer-issued corrections must be submitted. TaxBuddy’s platform evaluates the notice, pinpoints the issue, and recommends whether a revised return, clarification, or document submission is appropriate.
How to Respond to a Tax Notice on the Income Tax Portal
Responses are filed through the e-proceedings section of the Income Tax portal. Once logged in, the notice appears under the “Pending Actions” tab, where the type of response required is displayed. Supporting documents must be uploaded in the prescribed formats and correctly labelled. Explanatory notes should be concise, factual, and aligned with the issue raised in the notice. If a revised return is needed, the portal must reflect the updated ITR before submission of the reply. TaxBuddy simplifies this by preparing the response draft, attaching relevant documents, and submitting the reply in the correct format, ensuring procedural accuracy and timely submission.
Monitoring the Status of Your Submitted Response
Once a response is submitted, monitoring the outcome is crucial. The e-filing portal provides status updates such as “Response Submitted,” “Under Review,” “Additional Information Required,” or “Resolved.” Delays may occur if the department requests supplementary documents or further clarifications. Tracking the status helps identify whether further action is required, such as filing additional explanation notes or responding to follow-up notices. Real-time updates through the TaxBuddy mobile app ensure that no communication from the department is missed, eliminating the risk of penalties or escalated proceedings due to unintentional delays.
When to Consult TaxBuddy Experts for Notice Resolution
Professional guidance becomes essential when notices involve scrutiny assessments, complex documentation, capital gains verification, business income queries, or suspected reporting inconsistencies. Situations requiring legal interpretation—such as reassessment notices, unexplained cash deposits, or property-related discrepancies—benefit significantly from expert review. TaxBuddy’s expert-assisted notice resolution service offers personalised support, drafting replies, reviewing documentation, and representing taxpayers during follow-ups. This reduces the likelihood of errors and strengthens compliance with the Income Tax Act.
How TaxBuddy Ensures Compliance With Income Tax Rules (FY 2025-26 Updates)
With evolving regulations under the Income Tax Act and recent changes applicable from FY 2025–26, compliance requires precise interpretation. Key updates include extended timelines for filing revised returns, stricter scrutiny triggers, increased AIS cross-verification, and enhanced reporting obligations for high-value transactions. TaxBuddy integrates these rule updates directly into its notice resolution workflow, ensuring each response aligns with the latest provisions. Automated reconciliation tools compare declared income with AIS, TIS, and 26AS data, while expert reviews ensure responses meet departmental expectations and documentation standards.
Common Mistakes to Avoid When Responding to Notices
Delays in reading the notice, incomplete documentation, sending unverified explanations, or filing incorrect revised returns often lead to escalated scrutiny or penalties. Many taxpayers respond without understanding the underlying issue, resulting in mismatched replies. Uploading excessive documents instead of relevant evidence can confuse assessment officers, while ignoring follow-up notices may convert simple queries into demand orders. Another common mistake is responding through informal channels rather than the official portal. Using structured tools like TaxBuddy helps avoid these pitfalls by streamlining the process and ensuring accuracy from the first response.
Conclusion
Responding to an income tax notice becomes significantly easier with a clear, structured approach backed by the right tools. Organised documentation, accurate interpretation of notice intent, and timely submission ensure smooth resolution. Platforms such as TaxBuddy simplify the entire process with expert support, automated checks, and real-time tracking, helping taxpayers handle notices confidently and avoid penalties. For a simplified, secure, and hassle-free experience, it is advisable to download the TaxBuddy mobile app for guidance through every stage of tax filing and notice management.
FAQs
Q. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? TaxBuddy offers two flexible options for taxpayers based on comfort and complexity. The self-filing plan provides an AI-assisted experience where the system reads Form 16, AIS/TIS, and PAN-linked data automatically, helping users complete their returns with minimal manual effort. It is ideal for simple income structures. The expert-assisted plan is designed for those who prefer professional oversight or have complex tax situations such as capital gains, rental income, business income, foreign assets, or notices. Under this plan, a dedicated tax expert reviews documents, verifies accuracy, prepares the return, and files it on behalf of the taxpayer, ensuring full compliance with the Income Tax Act.
Q. Which is the best site to file ITR? The Income Tax Department’s e-filing portal is the official government platform for filing returns. However, taxpayers often prefer platforms that simplify data entry, reduce errors, and provide personalised assistance. TaxBuddy ranks among the top choices because it blends automation with expert review. It extracts data directly from government systems, flags mismatches, performs accuracy checks, and provides support throughout the filing process. This significantly reduces the risk of filing mistakes, defective returns, or post-filing notices, making it one of the most reliable platforms for seamless tax filing.
Q. Where to file an income tax return? An income tax return can be filed on the official Income Tax e-filing website or through authorised private platforms that offer enhanced user experience and smarter workflows. TaxBuddy provides an intuitive interface where taxpayers can upload Form 16, import AIS/TIS, autofill details, and complete their return with guided steps. For those needing more assistance, expert-led filing ensures end-to-end accuracy. Both options are valid; the choice depends on how much help or automation is preferred.
Q. What should be done immediately after receiving an income tax notice? The first step is to read the notice carefully to understand its purpose—whether it is for mismatch, clarification, document submission, or scrutiny. The notice must then be authenticated using the DIN verification tool on the e-filing portal to ensure it is genuine. Before responding, the taxpayer should check AIS, TIS, Form 26AS, bank entries, and the original ITR to identify discrepancies. Once the issue is identified, supporting documents should be collected so that the response aligns accurately with the department’s query.
Q. How to know if an income tax notice is genuine? A genuine notice from the Income Tax Department includes a Document Identification Number (DIN) and is issued from official domains such as @incometax.gov.in. The DIN can be authenticated on the Income Tax portal using the “Authenticate Notice/Order” feature. Details such as the officer’s designation, section under which the notice is issued, and the date must match the portal records. Platforms like TaxBuddy also provide authentication checks to help taxpayers avoid falling prey to fraudulent emails or messages.
Q. Can a revised return be filed after receiving a notice? Yes. If the notice highlights errors in the originally filed return—such as incorrect income reporting, missing deductions, or mismatches with AIS/TIS—a revised return can be filed under Section 139(5). As per the updated law, revised returns can now be filed within 48 months from the end of the assessment year, providing ample time to correct mistakes. A revised return must reflect the corrected details before submitting a response to the notice to ensure consistency and avoid further discrepancies.
Q. How long does the Income Tax Department take to process notice responses? Processing timelines vary based on the nature of the notice. Simple clarifications under Section 143(1)(a) are often reviewed within a few days or weeks. Notices seeking document uploads or explanations may take longer, depending on assessment workloads. Scrutiny notices under Section 143(2) or reassessment notices under Section 148 involve detailed examination and may require multiple rounds of follow-up. Monitoring notice status regularly is crucial because timely replies can prevent escalation.
Q. What happens if a tax notice is ignored? Ignoring a tax notice can lead to serious consequences. The department may treat non-response as non-compliance, resulting in penalties, interest, or disallowance of claims. In many cases, the assessing officer may proceed with a best judgment assessment, increasing the risk of higher tax liability. Continued non-compliance can escalate into scrutiny or reassessment proceedings. Responding on time ensures the issue remains simple and prevents unnecessary complications.
Q. Does TaxBuddy assist with scrutiny or reassessment notices? Yes. TaxBuddy provides specialised support for scrutiny cases under Section 143(2), reassessment proceedings under Section 147/148, and high-value transaction inquiries. These notices require detailed explanations, precise documentation, and expert understanding of tax law. TaxBuddy’s experts analyse the issue, prepare structured responses, guide documentation, and help ensure that submissions meet the standards expected by assessing officers. This reduces the chances of adverse assessments or penalties.
Q. Are bank details important during notice responses? Yes, bank details are essential because they influence refund processing, TDS matching, AIS data accuracy, and high-value transaction reporting. Incorrect or inactive bank accounts can result in mismatches between the ITR and AIS, which may trigger automated notices. During responses, the taxpayer must ensure that bank accounts listed in the ITR are correct, validated, and linked with PAN. Updating bank details on the e-filing portal or through TaxBuddy helps avoid reconciliation issues.
Q. What documents are required for responding to notices? Documents depend on the notice type but generally include the previously filed ITR, Form 26AS, AIS/TIS, Form 16, salary slips, interest statements, capital gains reports, rent agreements, investment proofs, and bank statements. For scrutiny notices, further records such as invoices, loan statements, property documents, and business books may be required. The goal is to provide clear evidence that supports the information reported in the return. Organising documents beforehand ensures a smooth and accurate response.
Q. How does TaxBuddy help track notice status and updates? TaxBuddy offers real-time updates through its mobile app, enabling taxpayers to track whether the notice is under review, awaiting clarification, or resolved. The system monitors changes in the Income Tax portal status and alerts users when additional documents are requested or when the department takes action. This prevents missed deadlines and ensures timely responses. The app’s consolidated dashboard also keeps all notices, responses, documents, and updates organised for easy follow-up.
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