Income Tax Notice Alert: TDS Deducted But Unfiled ITRs May Trigger Enforcement

CBDT Chairman: Income Tax Notices Targeting Taxpayers with Definitive Information.

The Income Tax Department is preparing to issue notices to individuals who have failed to file their income tax returns (ITRs). This initiative extends to individuals for whom income tax has been deducted at the source (TDS).

The move, as reported by The Economic Times, suggests that even if TDS has been deducted from an individual’s income, the failure to file the corresponding ITR may lead to enforcement actions or notices from the Income Tax Department.

CBDT Chairman Nitin Gupta has clarified that the Income Tax Department will issue notices selectively, targeting taxpayers for whom the department possesses definite information. He emphasized the department’s commitment to enhancing taxpayer services, aiming to expedite processes such as refund disbursement, ensuring updated returns, and addressing significant tax disputes.

The CBDT has established a Demand Management Centre in Mysuru, concentrating on tax disputes exceeding Rs 1 crore, according to the chairman. He explained that, at an agreed-upon time, the taxpayers, along with their chartered accountants and assessing officials, come together to collaboratively address and reach agreements on assessments.

Chairman Nitin Gupta mentioned that initially, the centre focused on tax disputes limited to Karnataka. However, it has expanded its scope and is now handling cases from various parts of India. This expansion indicates the growing role and effectiveness of the Demand Management Centre in addressing tax disputes on a national scale.

In the Interim Budget 2024, Finance Minister Nirmala Sitharaman revealed the withdrawal of outstanding tax demands up to Rs 25,000. This decision aimed to address numerous unresolved, unverified, non-reconciled, or disputed direct tax demands, some dating as far back as 1962. These outstanding demands were causing distress to honest taxpayers and impeding the processing of refunds for subsequent years.

Finance Minister Nirmala Sitharaman, during the Interim Budget 2024, proposed the withdrawal of outstanding direct tax demands up to Rs 25,000 for the period up to the financial year 2009-10 and up to Rs 10,000 for the financial years 2010-11 to 2014-15.

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