Dealing with an online income tax notice is easier

It saves time and increases transparency by making the assessing officer more accountable

After the success of its pilot project, the Central Board of Direct Taxes (CBDT) is planning to roll out paperless assessment, and plans to cover the entire country by the end of the current financial year. Taxpayers will soon be able to choose if they want to respond to income tax (I-T) notices online, sitting in the comfort of their home or office or submit the reply manually at the tax office.

“Online proceedings and assessment can help taxpayers save time as they can submit replies at the time convenient to them. It also brings in transparency and will reduce corruption. Assessing officers will only ask for relevant documents about the case as the system increases accountability,” says Kuldip Kumar, partner and leader for personal tax at PwC.

Notices are sent to registered e-mail and the taxpayer also receives an alert on his/her mobile phones. If an individual chooses to respond online, he needs to log into the e-filing portal and click the ‘e-proceeding’ tab to access the notice and the questionnaire along with it. Based on the notice, there will be questions that the assessee needs to answer and upload the relevant documents.

The taxpayer needs to ensure that if he chooses to answer it on the e-filing website, he responds quickly. The notice is time-bound and it closes automatically after seven days. The I-T department has integrated the proceeding process within the e-filing portal. It means, all comments and demands of the assessing office can be seen in an assessee’s account and he can choose to go online anytime during the proceeding.

Alternatively, the taxpayer can also decide to respond over the email and provide the information the assessing officer has asked. Just ensure that all the documents send are in the PDF format and the size of the attachment does not exceed 10 megabytes. If it does, the taxpayer can send more than one email. When drafting the reply, number the documents and provide the reference to the questions raised in the notice.

At present, the online assessment system only let taxpayers respond to notices related to assessment. But going forward, the government will add more modules to it, according to tax experts. E-proceedings are compulsory for notices related to Section 143(1)(A). This is sent when the taxes deducted at source (TDS) does not match with the returns filed. “It’s not what is reflected in Form 16, Form 16A or Form 26As. The government also tracks the tax collected at source when a person purchases a car above Rs 10 lakh or sells a property and the buyer deposits TDS of one per cent of the consideration,” says Chetan Chandak, head of tax research at H&R Block India.

A taxpayer has the option to go paperless for notice issued under Section 143(2) and Section 147 online. Notices under Section 143(2) are those that are generated through the computer aided scrutiny selection after the department completes the assessment of all the returns filed. The computer generates this notice after analysing the returns taxpayers file. When a taxpayer misses reporting any income, notices are sent under Section 147.

What lies ahead

• A timeline for officers to complete cases

• Cases to be randomly assigned to officers anywhere in the country irrespective of jurisdiction

• E-proceeding to be made available for all types of notices and communication