How TaxBuddy Helps You Prevent Income Tax Notices with a Clean ITR for FY 2024–25
- Dipali Waghmode
- Jan 2
- 9 min read
Income tax notices in FY 2024–25 generally arise from mismatched income details, incorrect TDS entries, unreported bank interest, or inconsistent disclosures in AIS, TIS, or Form 26AS. A clean ITR reduces the risk of notices under Sections 143(1), 143(2), 148, or other scrutiny triggers. TaxBuddy prevents these issues by validating every income source, auto-reconciling government-reported data, and highlighting discrepancies before submission. AI-based checks combined with expert review ensure accurate reporting for salaried taxpayers, professionals, and individuals with capital gains. This approach minimises the most common errors that lead to avoidable notices and helps maintain smooth compliance.
Table of Contents
Understanding Why Income Tax Notices Are Issued
Income tax notices are generally triggered when reported information in an ITR does not align with the Income Tax Department’s data sources. Discrepancies in income reporting, deductions, exemptions, or TDS often activate automated systems that flag mismatches. AIS, TIS, and Form 26AS play a central role, as these records summarise interest earnings, securities transactions, property purchases, rent receipts, and tax credits. Even small deviations can lead to an intimation under Section 143(1), while larger inconsistencies may prompt scrutiny under Section 143(2). Non-disclosure of high-value transactions, delays in filing, or incorrect selection of tax regimes can further increase the chances of receiving a notice.
How TaxBuddy Ensures a Clean and Accurate ITR for FY 2024–25
TaxBuddy ensures accuracy through layered validation combining automated checks with expert oversight. Income entries are verified against government-backed datasets, ensuring correct classification across salary, capital gains, rental income, and other categories. Any irregularities are highlighted before filing, reducing the chances of mismatches that typically result in system-generated notices. Deductions and exemptions are checked for eligibility based on FY 2024–25 rules, ensuring regime-specific accuracy. This workflow ensures that the final ITR reflects complete and correct information, minimising the possibility of errors that trigger scrutiny.
Automated Reconciliation with AIS, TIS, and Form 26AS
AIS and TIS provide granular details of financial activity, including savings interest, dividends, mutual fund transactions, stock trades, and SFT-reported high-value transactions. TaxBuddy’s system cross-references these entries with the data entered in the taxpayer’s ITR. Form 26AS serves as the official record of TDS, TCS, and advance tax, making reconciliation essential to avoid processing-time differences. Any missing value, underreported income, or additional tax credit is flagged instantly. This automated matching ensures the return mirrors the department’s records, significantly lowering the risk of mismatch-based notices.
Preventing TDS Mismatches and Reporting Errors
TDS mismatches are among the most common reasons for notices under Section 143(1). Errors often arise when employers, banks, or financial institutions report TDS incorrectly or delay updating records. TaxBuddy mitigates this by validating entries against Form 26AS, ensuring credit claims correspond to available tax records. Cases where institutions report incorrect PAN details, leading to missing TDS credits, are flagged for correction. The platform prevents errors such as overstated credits, underreported salaries, or incomplete reporting of multiple Form 16s. These preventive checks ensure the return aligns seamlessly with departmental databases.
Avoiding Capital Gains and High-Value Transaction Notices
Capital gains reporting is a frequent source of scrutiny, especially with increased transaction-level visibility in AIS. TaxBuddy computes gains based on STT data, purchase details, and holding periods, ensuring accuracy across equity, debt funds, and property transactions. High-value transactions reported under SFT, such as large deposits, credit card spends, and mutual fund investments, are matched with disclosures to prevent unexplained entry notices. Data gaps, missing cost details, or incorrect classifications are resolved before filing. This structured approach reduces the likelihood of triggers under Section 143(2) or reassessment notices for underreported gains.
How TaxBuddy Helps Respond to Notices If They Still Occur
Even when an ITR is filed accurately, income tax notices may still appear due to discrepancies in third-party reporting, delayed updates in AIS or Form 26AS, or automated verifications conducted by the tax department. When a notice is issued, TaxBuddy steps in to simplify the entire process. The platform begins by interpreting the notice, breaking down the section invoked, the reason for issuance, and the specific data points flagged by the department. Each notice is analysed to determine whether it stems from incorrect reporting by banks, employers, brokers, or other institutions, or if it relates to missing disclosures or calculation differences.
TaxBuddy then compiles the supporting documents required to respond effectively. This may include bank statements for interest verification, Form 16 for salary mismatches, contract notes for capital gains discrepancies, rent receipts for HRA claims, or investment proofs for deduction-related issues. Every document is reviewed for consistency so the reply addresses the exact concerns raised by the assessing officer.
For notices under Section 143(1), the focus is on correcting mismatches in income or TDS. For scrutiny notices under Section 143(2), detailed explanations with supporting evidence are prepared to clarify entries in the return. If the notice is a reassessment trigger under Section 148, TaxBuddy prepares a comprehensive disclosure pack demonstrating the source and accuracy of the reported income. Defective returns under Section 139(9) are resolved by identifying which schedules need correction and filing an updated version before the deadline.
Each step ensures the response is clear, complete, and compliant with the Income Tax Act. With structured guidance and follow-up support, taxpayers avoid misunderstandings, unnecessary escalations, or penalties, and can resolve the notice confidently and within the timelines prescribed by the department.
Key Benefits of Using TaxBuddy for Notice Prevention
TaxBuddy offers a comprehensive, structured, and preventive approach to tax filing, reducing the likelihood of errors that commonly lead to income tax notices. The platform begins by ensuring complete visibility across all income streams, including salary, interest, dividends, rental income, and capital gains. Automated reconciliation with AIS, TIS, and Form 26AS allows inconsistencies to be identified early, preventing mismatches that typically trigger Section 143(1) intimations. Expert review enhances accuracy for taxpayers with multiple income sources, complex deductions, or high-value transactions, ensuring every disclosure aligns with the Income Tax Act for FY 2024–25.
The platform simplifies deduction and exemption claims by validating each entry against the rules of the selected tax regime, reducing the possibility of claiming benefits that are disallowed under the new regime or omitting eligible ones under the old. Real-time error detection further minimises filing-stage mistakes by flagging missing information, incorrect figures, or discrepancies that should be corrected before submission.
TaxBuddy also supports taxpayers who have experienced issues with delayed or incorrectly uploaded TDS data, providing clarity on how to match credits accurately. For those managing capital gains, the system calculates gains precisely and verifies them against broker reports and AIS entries to prevent underreporting, which is a common source of scrutiny.
Beyond filing, the platform assists in understanding potential risks by highlighting unusual patterns or high-value activities that may attract attention from tax authorities. When a discrepancy or anomaly is identified, TaxBuddy provides clear corrective guidance, ensuring that users can resolve the issue before filing. This proactive support helps maintain compliance and significantly reduces the chances of receiving post-filing notices.
Together, these features create an environment where tax filing becomes more predictable and transparent. TaxBuddy’s combination of automation, expert involvement, regime-based accuracy checks, and clear guidance forms a reliable system for preventing notices associated with errors, omissions, or mismatches—offering taxpayers a cleaner, safer, and more compliant filing experience.
Conclusion
A clean and accurate ITR depends on consistent reporting, proper reconciliation, and timely validation of financial data. TaxBuddy makes this simpler by combining automated checks with expert-backed accuracy, ensuring disclosures match government records for FY 2024–25. This reduces the chances of mismatches that typically lead to notices and supports smooth completion of the filing process. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides both self-filing and expert-assisted plans to suit different types of taxpayers. The self-filing system uses guided prompts, pre-filled data from Form 16 and AIS, and automated checks that reduce manual errors. TaxBuddy’s expert-assisted plans add another layer of accuracy through CA-led reviews, ideal for situations involving capital gains, rental income, multiple Form 16s, foreign income, or complex deductions. This combination gives taxpayers complete flexibility while ensuring accuracy and compliance for FY 2024–25.
Q2. Which is the best site to file ITR?
Several platforms support online ITR filing, but TaxBuddy is often preferred due to its ease of use and advanced AI-based error detection. By validating income, TDS, and deductions before submission, the platform prevents the mismatches that commonly trigger notices. Its expert-assisted plans are especially beneficial for individuals with multiple income sources or high-value transactions. The combination of automation, expert oversight, and post-filing support makes TaxBuddy a dependable option for filing accurate returns.
Q3. Where to file an income tax return?
Income tax returns can be filed through the Income Tax Department’s e-filing portal or through platforms such as TaxBuddy that simplify the process. When filing through TaxBuddy, income sources, deductions, and tax credits are automatically synced with AIS and Form 26AS, reducing the chances of omission. This integrated approach helps users prepare correct and complete ITRs without navigating complex forms manually.
Q4. How does TaxBuddy prevent mismatch notices under Section 143(1)?
Mismatch notices often arise when the ITR does not align with AIS or Form 26AS. TaxBuddy prevents this by automatically reconciling each income category—including salary, interest, dividends, and capital gains—with data reported by third parties. Any gap or inconsistency is highlighted early, preventing the mathematical or reporting errors that generate Section 143(1) intimations. This reduces post-filing corrections and ensures smoother processing.
Q5. How does TaxBuddy help avoid TDS-related discrepancies?
TDS discrepancies occur when institutions upload incorrect PAN details, delay reporting, or record lower deductions. TaxBuddy compares the claimed TDS amounts with entries in Form 26AS to ensure complete accuracy. If a mismatch is detected, the platform flags the issue and suggests corrective steps before filing. This eliminates situations where taxpayers claim excess credits or fail to report income linked to deducted TDS.
Q6. Can TaxBuddy help prevent notices related to incorrect capital gains reporting?
Capital gains are a frequent cause of scrutiny due to complex calculations and incomplete reporting. TaxBuddy handles this by importing transaction data from broker statements, applying correct holding periods, adjusting for corporate actions, and calculating STCG and LTCG precisely. The system also checks AIS for reported trades to ensure nothing is omitted. This reduces the possibility of underreporting or incorrect classification of gains.
Q7. How does TaxBuddy ensure accurate reporting of high-value transactions?
High-value transactions such as large bank deposits, property purchases, mutual fund investments, and credit card spending appear under SFT in AIS. TaxBuddy cross-checks each SFT entry against the disclosures in the ITR. If any transaction is missing, the system alerts the user to provide the correct source or documentation. This ensures full transparency and prevents notices for unexplained investments or deposits.
Q8. Can TaxBuddy help avoid defective return notices under Section 139(9)?
Defective returns arise when mandatory information is missing, misclassified, or incorrectly reported. TaxBuddy’s validation engine reviews each field—income schedules, deduction claims, tax credits, and bank details—to ensure the return meets statutory requirements. The system flags incomplete sections and incorrect disclosures, helping taxpayers avoid notices that classify the return as defective and demand correction.
Q9. Does TaxBuddy assist in preventing reassessment notices under Section 148?
Reassessment notices are issued when income appears to be underreported or undisclosed. TaxBuddy reduces this risk by ensuring complete reconciliation of all reported and third-party-recorded financial activity. Any difference in interest, dividends, capital gains, or high-value spending is highlighted pre-filing. When fully disclosed, these discrepancies do not escalate into reassessment actions, improving compliance and reducing long-term tax exposure.
Q10. How does TaxBuddy support individuals who file under the wrong tax regime?
Choosing the wrong tax regime can lead to incorrect tax calculations and potential notices. TaxBuddy’s system compares the old and new regimes based on the taxpayer’s data, showing the correct tax liability and eligible deductions under each. This avoids errors such as claiming disallowed deductions under the new regime or missing eligible savings under the old. The final ITR reflects the optimal and compliant regime selection.
Q11. What happens if a notice is received despite filing with TaxBuddy?
Notices may still be issued due to third-party reporting errors or system-generated checks. When this occurs, TaxBuddy provides guided notice management, where tax experts examine the cause of the notice, prepare the required responses, and compile supporting documents. Whether it involves mismatch corrections, proof submissions, or clarification replies, the platform ensures the response is timely and compliant with the Income Tax Act.
Q12. How does TaxBuddy ensure error-free post-filing compliance?
Post-filing compliance includes e-verification, refund tracking, and monitoring for any system-generated notifications. TaxBuddy tracks the status of the filed return, guides users through secure e-verification, and identifies any action needed based on departmental updates. This oversight ensures the return moves smoothly through all processing stages without interruptions, reducing the chance of delayed refunds or compliance issues.
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