Received a tax mismatch notice from the IT department? Here is how to set it right

• You may receive a notice when there is a mismatch between disclosures in the ITR and information the department receives
  
• The department has made a self-contained on-screen functionality available on the income tax portal
  
• Taxpayers can now easily identify discrepancies and take prompt action on the portal itself by furnishing their response
  

A notice from the income tax department is never good news. But who can stop a notice from the authorities? The Income Tax department has been sending notices for income tax mismatch and many recipients are caught unaware.

The good news is that now the IT department has made it more convenient to take action if you receive such a notice. So, here’s everything you need to know about such notices and how to respond to them.

Why you may receive an IT mismatch notice

An income tax mismatch notice can happen due to several reasons. In an increasingly digital world, financial transactions rarely remain unreported and therefore, even an unintentional omission in our filing can result in a notice.

“There may be an income tax mismatch between disclosures in the income tax returns (ITR) filed and information as received from the reporting entities. The reporting entities include a host of agencies, including banks, financial institutions, stock market players, mutual funds, and property registrars,” says Abhishek Soni, CEO, Tax2Win, an income tax portal.

A ‘mismatch’ may also be identified between the information filed in the ITR vis-à-vis information of specified financial transactions, as available with the department. Other reasons for a tax mismatch may be the non-reporting of high-value transactions and bogus deductions and claims without proper evidence.

The income tax department has initiated the e-Verification Scheme-2021 to address these discrepancies. “As part of this scheme, communications are dispatched to taxpayers, alerting them to the mismatches in their information. The taxpayers are made aware of the mismatch through SMS and emails as per details available with the department,” says Naveen Wadhwa, Vice President, Research and Advisory, Taxmann.

What should you do?

The introduction of the compliance portal and the e-verification scheme 2021 by the Central Board of Direct Taxes (CBDT) marks a significant advancement in simplifying tax compliance procedures for individuals. With the availability of an on-screen functionality on the income tax portal, taxpayers can now easily identify discrepancies and take prompt action without the need for cumbersome offline processes.

The on-screen functionality is self-contained and will allow the taxpayers to reconcile the mismatch on the portal itself by furnishing their response. No document is required to be furnished.

“This 'self-contained' feature empowers individuals to reconcile mismatches directly within the portal, streamlining the entire process and saving valuable time. There are some predefined inputs among which the user can choose the desired/ appropriate option for submitting the response,” says Soni.

The compliance portal provides on-screen functionality. “Taxpayers registered on the e-filing website can navigate to the compliance portal directly after logging into their account. Details of identified mismatches will be available under the ‘e-Verification’ tab. Taxpayers not registered on the e-filing website must register to view the mismatch,” explains Wadhwa.

Taxpayers who are unable to explain the mismatch may file an updated return to disclose any under-reporting of income. Overall, the department is making efforts to simplify the overall filing and clarification processes, and if you do receive a notice, you can issue a prompt, timely response online without too much of a hassle.