Proofs Not Submitted to Employer: How TaxBuddy Handles Income Tax Notices on Salary Declarations
- Rajesh Kumar Kar
- Dec 26, 2025
- 9 min read
When salary proofs like HRA rent receipts or LTA bills are not submitted to the employer on time, Form 16 often reflects higher taxable income. This mismatch does not go unnoticed. The Income Tax Department frequently flags such cases during processing and issues notices asking taxpayers to justify deductions claimed in the return. These notices are time-bound and require proper documentation through the income tax portal. Without a structured response, the issue can escalate into tax demands or penalties. Platforms like TaxBuddy simplify this process by identifying the notice type, guiding document submission, and managing compliant responses end to end.
Table of Contents
Why Not Submitting Proofs to Employer Triggers Tax Notices
Employers calculate taxable salary based on proofs submitted during the year. When documents for exemptions such as HRA or LTA are not provided on time, these benefits are excluded from payroll computation and Form 16 reflects a higher taxable income. During return processing, the Income Tax Department compares Form 16 with the deductions and exemptions claimed in the ITR. Any mismatch signals a potential over-claim. This automated comparison is one of the most common reasons salary-related notices are issued, even when the claim itself is valid.
Common Income Tax Notices on Salary Declarations
Salary declaration issues usually attract automated or information-seeking notices rather than immediate penalties. These notices aim to verify whether exemptions or deductions claimed in the return are supported by documents. Most cases fall under summary processing or additional information requests. If responses are timely and accurate, matters generally close without further action. Problems arise when notices are ignored, responded to incorrectly, or supported with incomplete documentation.
Section 143(1) Intimation for Salary Proof Mismatch
A Section 143(1) intimation is generated after automated processing of the return. It highlights differences between income declared in the ITR and data available with the department, such as Form 16, AIS, or Form 26AS. In salary cases, this often points to HRA, LTA, or other exemptions claimed in the return but not reflected in Form 16. Taxpayers are expected to review the intimation, agree or disagree with the adjustment, and submit supporting proofs if the claim is correct.
Section 142(1) Notice for Additional Information
When automated adjustments are not sufficient, the department may issue a Section 142(1) notice. This notice seeks specific documents or explanations, such as rent agreements, travel bills, or bank statements. It is a formal request and carries strict deadlines. Failure to respond can escalate the matter into reassessment proceedings. A clear, section-wise response with proper attachments usually resolves the issue at this stage.
Documents Required to Respond to Salary Declaration Notices
The exact documents depend on the exemption or deduction under review. Commonly required records include rent agreements and rent receipts for HRA, travel tickets or invoices for LTA, salary slips showing allowance breakup, bank statements reflecting rent payments, and investment proofs for deductions like Section 80C or 80D. Documents should align with the period and amounts claimed in the return to avoid further queries.
How TaxBuddy Handles Income Tax Notices on Salary Declarations
TaxBuddy simplifies notice handling by converting a complex compliance task into a guided process. Notices received through the income tax portal are reviewed to identify the exact issue, whether it is a mismatch, missing proof, or clarification request. The platform helps collect the right documents, maps them to the relevant income tax provisions, and prepares a structured response. Submissions are made digitally within prescribed timelines, reducing the risk of escalation or incorrect replies.
Step-by-Step Process Followed by TaxBuddy Experts
The process begins with notice analysis to determine its nature and urgency. Salary data from AIS, Form 26AS, and Form 16 is reviewed to identify discrepancies. Required proofs are then requested and verified for completeness. A draft response is prepared, referencing applicable sections of the Income Tax Act, and uploaded on the e-filing portal. For complex cases, expert-assisted plans ensure continuous follow-up until closure.
Timelines and Consequences of Ignoring Salary Proof Notices
Most salary-related notices provide a response window of 15 to 30 days. Missing these deadlines can result in tax demands, interest, penalties, or reopening of assessments. In prolonged non-compliance, reassessment proceedings may be initiated. Timely and accurate responses generally prevent these outcomes and help close matters at an early stage.
How Salary Exemptions Are Verified Under Old Tax Regime
Under the old tax regime, salary exemptions are allowed only when specific conditions are met and supported by proper documentation. Claims such as House Rent Allowance and Leave Travel Allowance are not accepted purely on declaration. The Income Tax Department follows a verification-based approach, especially when these exemptions are not reflected in Form 16 or appear higher than usual.
For HRA, verification begins with a comparison between salary structure reported by the employer and the exemption claimed in the return. The department checks whether HRA is actually part of the salary and whether rent payments have been made during the relevant period. Rent receipts, rent agreements, and bank statements are reviewed to confirm payment authenticity. City classification plays a key role, as metro and non-metro cities have different exemption limits. In some cases, PAN details of the landlord are also examined when annual rent crosses the prescribed threshold.
LTA claims are verified through travel-related documentation. The department checks travel tickets, invoices, and boarding details to ensure that travel was undertaken within India and during the permitted block period. The mode of travel, route taken, and number of journeys claimed are reviewed to ensure compliance with LTA rules. Claims exceeding allowable frequency or lacking proper proof are commonly disallowed.
Apart from HRA and LTA, other salary-related exemptions and deductions are cross-verified with AIS and Form 26AS data. Bank statements are used to reconcile salary credits and expense payments. If the exemption claimed does not align with reported income or available financial data, the claim is flagged for further review.
Verification typically happens during automated processing or in response to notices. When supporting documents are consistent, clearly dated, and match the claimed amounts, exemptions are usually accepted. Incomplete or inconsistent documentation often leads to partial or full disallowance, followed by tax demand or additional clarification requests.
Is HRA and LTA Allowed in the New Tax Regime?
House Rent Allowance and Leave Travel Allowance are not available as exemptions under the new tax regime. Taxpayers who opt for this regime agree to give up most salary-based exemptions and deductions in return for lower income tax slab rates. This trade-off is built into the structure of the new regime and applies uniformly, regardless of income level or employment type.
When the new tax regime is selected while filing the return, salary income is expected to be reported without claiming exemptions such as HRA or LTA. Even if these components appear in the salary structure or were received during the year, they are treated as fully taxable under this regime. The employer may still show these allowances as part of gross salary, but no exemption is permitted at the return-filing stage.
If HRA or LTA is mistakenly claimed while filing under the new tax regime, the Income Tax Department’s automated processing systems usually detect the inconsistency. This happens because the regime selection is captured in the return and cross-verified during processing. As a result, such claims are commonly disallowed under Section 143(1), leading to adjustments in taxable income and, in some cases, additional tax demands.
In situations where the mismatch is significant or repeated, the department may also seek clarification through a notice. Even with valid rent receipts or travel bills, these claims are not accepted under the new regime, since the law itself does not permit the exemption. Submitting proofs in such cases does not change the outcome, as eligibility is determined by the chosen regime rather than the availability of documents.
Taxpayers who wish to claim HRA or LTA must opt for the old tax regime, where these exemptions are allowed subject to conditions and documentation. The choice between regimes should therefore be made after comparing the tax impact of lower slab rates versus the value of exemptions and deductions. Selecting the correct regime and aligning claims accordingly helps avoid unnecessary adjustments, notices, and follow-up compliance.
Conclusion
Salary-related tax notices often arise from timing gaps rather than incorrect intent. With proper documentation and structured responses, these matters are usually resolved without financial impact. Using a guided platform helps reduce errors, manage deadlines, and ensure compliance with income tax rules. For anyone looking for assistance in tax filing and notice handling, it is advisable to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy offers both self-filing and expert-assisted plans to suit different taxpayer needs. Self-filing plans are designed for straightforward salary cases, where the system guides users through income reporting, deduction selection, and document uploads. For cases involving notices, salary mismatches, or complex income structures, expert-assisted plans assign qualified tax professionals who analyse the issue, prepare responses, and ensure accurate submission on the income tax portal.
Q. Which is the best site to file ITR?
The Income Tax Department’s e-filing portal is the official platform for filing returns. However, many taxpayers prefer assisted platforms that integrate with the portal and provide additional support. Platforms like TaxBuddy simplify filing by importing data from Form 16, AIS, and Form 26AS, highlighting mismatches early, and offering structured workflows that reduce errors and delays.
Q. Where to file an income tax return?
Income tax returns are filed through the Income Tax Department’s e-filing portal. Taxpayers may also use authorised platforms that are integrated with the portal. These platforms submit returns directly to the department while offering added features such as document management, error checks, and post-filing support.
Q. What if salary proofs were not submitted to the employer before Form 16 issuance?
When proofs are not submitted to the employer, Form 16 reflects a higher taxable salary. This does not permanently block the exemption claim. Proofs such as rent receipts or travel bills can still be submitted directly to the Income Tax Department if a notice is issued or during assessment. Proper documentation aligned with the claimed period is essential for acceptance.
Q. Can HRA be claimed in ITR without submitting proofs to the employer?
HRA can be claimed while filing the return even if proofs were not submitted to the employer, provided the taxpayer is eligible under the old tax regime. However, the department may seek verification. In such cases, rent agreements, rent receipts, and bank statements showing rent payments must be produced to support the claim.
Q. How long does it take to resolve a salary-related tax notice?
Resolution timelines depend on the type of notice and the quality of the response. Simple mismatches under Section 143(1) are often resolved within a few weeks after submission. Notices seeking additional information under Section 142(1) may take longer, especially if multiple clarifications are required. Timely and complete responses generally shorten the resolution period.
Q. Are penalties automatic for salary proof mismatches?
Penalties are not automatic. Salary mismatches usually lead to verification or adjustments first. Penalties arise only if incorrect claims are confirmed after verification or if notices are ignored. Timely submission of correct documents often results in closure without financial consequences.
Q. What happens if incorrect documents are uploaded?
Uploading incorrect or inconsistent documents can lead to rejection of the exemption claim or further clarification notices. In some cases, the department may disallow the claim and raise a tax demand. Ensuring that documents match the claimed amounts, periods, and salary structure is critical to avoid repeated queries.
Q. Can revised returns be filed after receiving a salary notice?
Depending on the stage of proceedings and statutory deadlines, revised or rectified returns may be allowed. For processing-stage issues, rectification requests can address errors. Once formal assessment proceedings begin, responses must generally be submitted through the notice reply mechanism rather than by revising the return.
Q. Does opting for the new tax regime increase chances of salary notices?
Opting for the new tax regime does not by itself increase notice risk. However, claiming exemptions such as HRA or LTA, which are not allowed under the new regime, can trigger adjustments or notices. Accurate regime selection and consistent reporting reduce the likelihood of such issues.
Q. Is professional help necessary for Section 142(1) notices?
Section 142(1) notices require precise responses supported by documents and references to applicable provisions. While not mandatory, professional assistance is advisable, as incorrect or incomplete replies can escalate the matter into reassessment or penalty proceedings.
Q. Can TaxBuddy track notice status after submission?
TaxBuddy provides tracking and follow-up support after notice submission. Updates from the income tax portal are monitored, and additional responses are prepared if further clarification is sought, ensuring continuity until the notice is formally closed.
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