Respond to Tax Notices


As there is always a dispute between the tax a business entity calculated and paid at the time of filing income tax and the tax calculated for the firm by the income tax officer. If the tax officer finds that the firm has paid less tax than what it actually has to pay, then the firm receives a legal notice demanding the requirement of the outstanding tax payable by the firm. The notice may be in the form of a text SMS under the section 143(1). It may be in the form of online demand notice on the e-filing website. Time limit to respond to this legal notice is within 30 days from the date when it was received. Strict legal action can be taken by the income tax department if the business entity does not responds to the notice within the given time frame.

The tax payers should not panic if they get any notice like this. Instead they must check their accounts again and find out the exact reason why the notice has been sent to him/her be the income tax department. Also check the sections and legal laws to deal with the legal notice.

Steps to respond to the legal notice

  • 1. Log in into your e-filing website account with your credentials like your PAN, password and captcha code.
  • 2. Select 'Response to outstanding tax notice' under the 'E-file' tab.
  • 3. Outstanding demand notice will appear on your screen with your details in it.
  • 4. Select from the following options and click on the submit option
    • Demand is correct
    • Demand is partially correct
    • Disagree with demand
    • Demand is not correct but I agree for the adjustment.

If you select option A

Click on submit if you agree to the calculation of the income tax department regarding your outstanding tax. Then you need to pay the outstanding amount stated thereof. If you have to receive any kind of refund, then the refund will be adjusted to your outstanding tax.

If you select option B

In this scene, two columns for amounts will appear on your screen. One column will be automatic filled with the incorrect amount. It is the amount that is the difference calculated by the department. You need to fill up the second column with the amount that you feel is correct and additional documents required.

If you select option C

This option is same as the above option B

If you select option D

In this option, the reason of disagreement must be mentioned. Mention all the necessary details required there. After this, a transaction ID will be generated. Responses can be checked by clicking 'view' in the response column.

Note: the account should be checked daily for the updates by the income tax department.

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