Budget 2018: Mismatch in Form 26AS, ITR will not automatically fetch you income tax notice

Budget 2018 has proposed to remove the existing system of income tax return assessment where a return filer would be automatically sent a notice if his/her Form 26AS details did not match with the income declared in the return.

Form 26AS shows details of tax deducted at source from an individual's income and also the corresponding income.

Once this amendment is passed by the Parliament, it will restrict the tax authorities from sending system generated outstanding tax demand notices automatically to individuals in case a mismatch arises between ITR and Form 26AS, Form 16 and Form16A.

The current tax laws, under section 143(1), allows the tax-department to add any additional income shown in Forms 26AS and 16 which is not been included in the total income of the taxpayer while filing the income tax returns. Due to this, the IT department used to send automatic or system generated intimations to the taxpayers.

A demand notice sent to you by the assessing officer is calculated on the basis of the actual tax liability less of tax paid by you. The taxpayer is required to respond to it before the particular date and time mentioned in the notice.

Time was given to the assessee to respond to these intimations online by either disagreeing with additions with reasons, or agreeing to addition by revising returns within 30 days. Where no response was received, department would add this income in the return because of which additional tax had to be payable by assessee.

Archit Gupta, founder & CEO, ClearTax says, "Many assessees were left confused by this move whether the returns filed were finally accepted or not. This system was in effect for few months but then was also stalled temporarily due to the ambiguity and procedural complexities. With this proposal in the budget, the adjustment shall continue to be applicable for the IT returns filed up to AY 2017-18 (FY 2016-17). Those returns filed for AY 2018-19 (FY 2017-18) and after will not intimations for this adjustment."