How to respond to Income tax notices of non-filing of ITR of previous years?

Introduction

Filing income tax returns (ITRs) is an essential responsibility for each taxpayer. It no longer simply ensures compliance with the regulation but additionally helps transparent financial transactions. However, some people may also discover themselves in a state where they've not filed their ITRs for preceding years, leading to income tax notices. In this article, we can discover the reasons for receiving those notices, the capability results, and the steps people can take to deal with the scenario.

Common Reasons for Non-Filing

• Lack of Awareness: Some individuals might not be aware of their duty to submit income tax returns, mainly if their profits fall below the taxable threshold limit.
• Oversight: In some instances, taxpayers can also forget to file their ITRs due to busy schedules or other private reasons.
• Complex Tax Structure: The complexity of the tax may be reason for some individuals.
• Financial Challenges: Individuals dealing with economic problems may additionally forget about to report their ITRs, either because of a lack of assets or worry of ability tax liabilities.

Have you received this kind of message of non-filing of ITR?

Attention Taxpayer (XXXXX5265X) As in keeping with statistics to be had on your case on Compliance Portal of the Income Tax Department, you were supposed to file your ITR for A.Y. 2023-24 however the ITR has not yet been filed. Please submit your ITR or put up online response below "e-Campaign" tab on "Compliance Portal". After login to the e-filing Portal go to "Pending Actions" tab and click on "Compliance Portal". On Compliance Portal, navigate to "e-Campaign tab" and go to campaign type "Non filers" to submit response. Please ignore if ITR has already been filed. - Income Tax Department.

If you've recently received an SMS from the Income Tax department you have to file your Income Tax Return (ITR), it's not just a casual reminder. This message indicates that your income is above the ₹5 lakh threshold or that there are transactions present in the Annual Information Statement (AIS).

What is AIS?

The AIS is an in depth file summarising your financial transactions of  12 months. It includes various financial transactions, consisting of interest accrual, dividends, share market transactions, mutual fund transactions, and details associated with foreign places remittances.

The purpose of the Annual Information Statement is to consolidate and provide a summary of diverse financial transactions which could effect a taxpayer's income tax liability. This declaration is crucial for people to move-verify the data available with the tax department and make sure correct reporting of their earnings tax returns.

If you receive a notice for non-filing of ITRs, it is crucial to take prompt action. Here are steps to address the situation:

1. Review the Notice: Carefully read the notice to recognize the unique issues raised through the Income Tax Department.
2. Gather Documents: Collect all relevant documents, including income statements, financial institution statements, and investment information for the years in question.
3. File your ITR: File your Income tax return by submiting your income details, Calculate tax liability and after final check submit your ITR
4. Respond on the e-filing portal: Once you've successfully filed your ITR, log in to the e-filing portal. Navigate through Pending Actions > Compliance Portal > e-Campaign > Non-Filers. Since you have already filed your return, select the "ITR has been filed" response, provide the acknowledgement number & date of filing and submit.

Conclusion

Income tax notices for non-filing of ITRs can be a source of stress, but timely and appropriate action can help resolve the situation. It is essential for individuals to be aware of their tax obligations. Proactive compliance not only avoids financial penalties but also contributes to a more transparent and efficient tax system.

The author is an Income tax, GST and Acoounting practitioner