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🧾 Got an Income Tax Notice? Here's What Every Salaried Employee Should Know

🧾 Got an Income Tax Notice? Here's What Every Salaried Employee Should Know

👨‍💼 By CA Bhavesh Panpaliya | 📅 Updated July 2025

Why Did You Get That Tax Notice?

You’ve been paying taxes through your salary. Your Form 16 looks good. So why a notice?

That’s exactly what confuses most salaried people.
Truth is, even salaried individuals aren’t immune to income tax scrutiny. A notice usually means the tax department has found something worth double-checking.

Some common reasons:

Your declared salary doesn’t match what your employer submitted

You forgot to declare interest from FDs or rent income

Claimed fake or inflated HRA with no rent paid

High credit card or stock investment transactions

Missed filing ITR altogether

Claimed deductions without valid receipts

🧠 Example: Claimed ₹2 lakh HRA without an actual rent agreement? That’s a red flag.

📋 Types of Notices You Might Get

Let’s simplify this:

Intimation (143(1)): Summary of your return — tax payable or refund

Request for Info (142(1)): Asking for extra documents

Scrutiny (143(2)): Your return has been selected for deeper review

Defective Return (139(9)): Something’s wrong — fix and refile

Reassessment (148): They found missed income

Refund Adjustment (245): Your refund is being used to settle past dues

Demand Notice (156): You owe tax or penalties

⚠️ Don’t ignore any notice. Most can be resolved smoothly if you respond on time.

🏠 Why HRA & LTA Claims Are Being Flagged

Earlier, people got away with fake rent receipts and travel bills.
Now, not anymore.

The department uses data from:

Rent agreements and landlord PAN

TDS filings by tenants

Travel patterns (yes, even that!)

📌 Claiming ₹3 lakh HRA without paying actual rent? That’s a mismatch they'll catch.

🚨 Deductions Under the Scanner

A few deductions are getting more attention than ever:

HRA & LTA: Fabricated bills or no evidence

Donations (80G): NGOs that don’t exist or fake receipts

Home Loan Interest: Fake loan accounts

Political Contributions: Without any banking trail

📌 Tip: Claim only what you can support with clear documents and proofs.

✅ How to Stay Safe & Avoid Getting a Notice

If you want peace of mind during tax season, follow this simple checklist:

File your return on time

Match all entries with Form 26AS and AIS

Keep rent agreements, receipts, and proof of investments

Declare all income: salary, FD, freelance, rent, or even crypto

Don’t just “copy-paste” what your friend or colleague is claiming


🧠 Your ITR is like your financial fingerprint - keep it clean and accurate.

🤖 How AI is Making Tax Scrutiny Smarter

Yes, the Income Tax Department is using AI now.
It’s not just about random selection anymore — patterns matter.

AI looks for:

High EMI or credit card usage with low reported salary

Inconsistent HRA claims

Mismatched data from bank, PAN, TDS, and your ITR

Large stock/mutual fund investments without matching income


Example: You spent ₹5 lakh via credit card but showed ₹4.5 lakh salary? That’s a problem.

📌 Final Word

Receiving a tax notice isn’t always bad news. But ignoring it — that’s where the trouble begins.

Stay organized. Be honest. Keep documents ready.
And when in doubt, consult a professional.

👨‍💼 Need Help with a Tax Notice?

Let a Chartered Accountant handle it for you — stress-free.

📞 CA Bhavesh Panpaliya
Helping salaried professionals stay tax-compliant and worry-free
📲 +91-8888755557
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