Income Tax Return Filing is one of the most important aspects of personal finance management. If your gross total income (before allowing any deductions under section 80C to 80U) exceeds the basic exemption limits as prescribed by the Income Tax Department, you have to mandatorily file your Income Tax Return for that Financial Year (or Assessment Year).
Non-filing of ITR may attract penalties and also has severe consequences.
What if you have genuine reason(s) for not filing your income taxes? You might have quit your job and started your own business and assuming there is no taxable income in the first year , and you do not file taxes. How IT department considers these kind of non-filing cases?
Let me explain to you my own real-life experience. I was employed in the Information Technology (IT) industry till 2009-10 and filed my Income Tax Returns every year. In 2010 I had quit my job to pursue CFP (Certified Financial Planner) course full-time and also to start my own consultancy firm ReLakhs Financial Services.
In the Financial Year 2010-11 (AY 2011-12), I did not file my Income Tax Return as my gross total income was below the applicable basic exemption limit. But, during that FY, I had booked few Time Deposits (FDs) out of my previous year’s savings and also there were some TDS entries in my Form 26AS towards ‘Interest on Securities’.
As I did not file my Tax Return, I had received ‘non-filing of Income Tax Return Notice’ from the IT department. This is a compliance notice asking me to furnish information/reasons for not filing my ITR. They had also enclosed annexure with the information on my time-deposits (FDs).
Like-wise, there can be genuine reasons for not filing your taxes but you may end-up receiving compliance notice from the Department.
Latest update (22-Jan-2019) : The Income Tax Dept has identified several potential non-filers who have carried-out high value transactions in Financial Year 2017-18 but have still not filed Income Tax Return for Assessment Year 2018-19 (relating to FY 2017-18). The Department has now enabled e-verification of these NMS cases to reduce the compliance cost for taxpayers by soliciting their response online. Non-filers are requested to assess their tax liability for AY 2018-19 and file the Income Tax Returns (ITR) or submit online response within 21 days.
In this post let’s discuss – What is non-filing of income tax return notice? How to respond to non-filing of income tax return notice? How to handle notice from the Income Tax Department for non-filing of ITR? How to check the status of your response online?
Non-Filing Monitoring System
The Non-filers Monitoring System (NMS) is a pilot project which has been initiated by the Tax Department to prioritize action on non-filers with potential tax liabilities.
The IT dept carries out ‘data analysis’ to identify non-filers about whom specific information is available through various sources such as;
Through NMS around 12.19 lakh, 22.09 lakh and 44.07 Lakh non-filers with potential tax liabilities have been identified in 2013, 2014 & 2015 respectively..
The identified non-filers are informed by SMS, e-mails and letters. The below image is the letter received by one of my friends for non-filing of income tax return. (Click on the images to open them in new browser windows)
In most of the cases, the IT department sends notices by emails or by SMS. You can respond to the notice through your income tax e-Filing Account. There is no need of personal presence in this matter.
Below are the step by step guidelines on how to respond to the notice;
Conclusion
If you make a huge or high-value financial transactions there are chances of getting a notice for non-Filing of Income Tax Return from the compliance Management cell. It doesn’t necessarily mean that income tax department is looking at you as a tax evader.
You may be an NRI (with no taxable income in India) invested huge money in a property located in India and you may end up in getting a notice for non-filing of return.
Kindly note that if there is no taxable income then there is no need to pay tax (or) file income tax return. You are only requested to furnish your response in the compliance module on the e-filing income tax portal. You can respond to the notice online. The entire procedure is very simple.
In case if you have to respond to the notice by post, you can enclose document proofs (if any) to support/justify your response. If you do not submit your response within the prescribed time-limit, your case might be transferred to the concerned Assessing Officer (AO). He/she may take up your case for scrutiny.
If you consider your case as a complex one, kindly consult a Chartered Accountant.
I hope you find this post useful & informative. Kindly share your comments.
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(Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (Post published post date : 16-April-2016)
This post was last modified on July 11, 2023 11:16 am
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I am a Non Resident Indian (NRI; that is Live and work outside India; now in USA) since 1998. I do not have taxable income in India. In 2012, I purchased a flat in India using NRI House Loan from ICICI and 20% downpayment using my income from the US. EMI (load repayment) is done through my NRE Bank account in India (money from US is transferred to this NRE account). As I do not have taxable income in India, and I am NRI, I am not required to file a tax return in India. I have not filed tax return in India.
I received letters in 2015 and now in 2016 from the Income Tax Department of India as they have information about the property transaction in 2012. They asked to furnish response, which I did saying "I do not have taxable income in India, and I am NRI, I am not required to file a tax return in India". The letter is now asking to make use of the Tax Declaration Scheme 2016 (TDS) to disclose any undisclosed income.
As I have not taxable income in India in 2012 or any year, what should I do?
Should I disclose on TDS (online form) with Zero Income, and hope that there will not be any more notices? Please note that I have by snail-mail responded to each of these notices, (each one in 2015, July2016 & August 2016). No reply from IT department
Dear Sir,
Kindly reply to the notices online. My suggestion is to consult a CA as he/she would be in a better position to advise (need to look at the documents / notices).
Hi Sreekanth,
piece to piece useful information provided. Please help in below case :
My father was retired on 22 November 2013 but his tax was deducted by HR from Apr to Nov 2013. But he hadn't submitted the return for 2013-14 FY. His salary was Rs 40000 per month now he got notice for non filing of Income tax return for FY 2013-14 & FY 2014-15 . Since for FY 2014-15 he will mention "Others - left the job" but please guide us what to do as there is no option to file income tax return for 2013-14? What should we select for 2013-14 as his income was taxable from Apr 2013 to 22 Nov 2013 ?
Sincerely appreciate your reply.
Best Regards,
Pankaj
Dear Pankaj,
Has the TDS been deducted for FY 2013-14 by the employer?
As you have received the notice, I believe that you can file the ITR and file it. Kindly take help of a CA.
Hello Sir,
My father senior citizen (65 years old) had not filed tax so far and now received this letter from IT stating the CIB-403 (Deposit exceeding Rs. 2,00,000/- with a Banking Company) for the FY2013-14. He is holding FD and the interest amount is less than the eligible tax limit.
Kindly confirm if he just respond back to the compliance with option (1 or 2) or should file tax returns and then submit the response?
1. Self – Income from transaction is below taxable income,
or
2. Self – Investment/expenditure is out of accumulated savings
Thanks and Regards,
Kavitha
Dear Kavitha,
In case if you father does not have any other source of income and such income is below taxable limit, then he may just respond to 'compliance notice' that it is 'Self – Income from transaction is below taxable income.'
I believe that there is no need to file any Income Tax Return.
Once again a very informative piece. Just downloaded my Compliance Response Sheet, based on what I read here, thank you. A few questions:
How long do you reckon before the IT department closes the notice? I had responded on 25/5/2015, regarding a time deposit over Rs. 2,00,000. I choose "NRI, funds remitted from abroad, interest from NRO deposits below taxable limit".
On hindsight, I should have gone for "No taxable income".
Moreover, I didn't even see the "Related Information Summary" tab, until I read this. The tab as per the Compliance Response Sheet shows: "2011-12 - CIB-403 Time Deposit exceeding Rs. 2,00,000/- with a Banking Company - Self-Not known"
Guess I should have checked "Self" and "Self-not known".
Do you think I should re-submit?
Dear Jay,
As you have information regarding the time deposit, may I know why self & not known option???
Yes, you can re-submit the response to compliance notice.
Since I am aware of the Fixed deposit, will this not be a case of known. Hence I cannot select "not known". Is my interpretation correct?
Thank you.
I don't recall seeing the “Related Information Summary” tab or the options. So all I can now think is, it might have been the default option in the system.
I did this last year - so my memory is foggy.
Jay
Hi
Kindly reply me if you have resubmitted the reponse to compliance notice as the same case has been with me also. Would be very grateful if you would reply to me and also you case has been closed or not. Waiting for your reply
Hi,
I received a notice under code CIB-405 & TDS-192A.
As I bought a vehicle of 8.5 Lakhs in FY 13-14 and I have taken 5 Lakhs from my father to buy it.
What options should I choose under "Related Information Summary"
Dear Dheeraj,
You may consider 'Self & Investment/ expenditure is out of gifts/ loans from others', if you treat the amount given by your father as either GIFT or LOAN.
I transferred money into my mother's saving account from US in 2013-14. She don't file ITR as her income is less than taxable income. This year, she received notice for more than 10 lacs deposit in saving account. What option she should choose from the following for information code AIR-001
Options: Self – Investment/expenditure is out of exempt income,
Self – Investment/expenditure is out of accumulated savings,
Self – Investment/expenditure is out of gifts/loans from others,
Self – Investment/expenditure is out of foreign income,
Self – Income from transaction is exempt,
Self – Income from transaction is below taxable income,
Self – Income from transaction relate to different AY,
Self – Not known,
Other PAN,
Not Known,
Dear Ruchi,
Self – Investment/expenditure is out of gifts/loans from others, can be a better option.
But kindly note that income from such gift is taxable in the hands of your mother.
Kindly read: Gifts & income tax implications.
so well and easy explained article. Dear sir , can you give me clarity
I have received the below mentioned notice first time on 14th June 2016 by post.
SUB: NON FILING OF INCOME TAX RETURN-REG.
FINANCIAL YEAR 2012-2013 ASSESSMENT YEAR 2013-14
Compliance Module on the e-filling portal at income tax India filling
2012-13
STT-01, STT-02, STT-03
Sir,
IN 2012-13 I have done trading and following is the case of me...
I have turnover >> 1 crore but statement of capital loss more than rupees 10000 in equity then 25000 losses in commodity in FY 2012-13 and same year I have changed career direction become full time student so left the trading. And I have no taxable income up to date FY 2015-16. Since last four years I’m living on loan by friend and small saving for continue study and living expenses. And I decided myself to stop this way trading and priority focus on my study.so since august 2012 to update June 2016 ….but now IT notice become priority and stress on head the cost is price of lost the study time. And collecting document for IT to show my honest proof…
I was not aware until I get IT notice so kindly help to solve the puzzle
(1.) How I reply this notice kindly help me.when I have lost of Rs 40000/- and no income.
(2 if turnover is more than one crore (12-13) but loss and no any income source except FD interest whole year Rs 5000/
(3.) Is still after four years now in june 2016 when i get notice .this time I can fill return for FY 2012-13 AY 2013-14 and carried forward loss? When I have already left trading in 2012-13 but not closed demat and broker account.
i have no account book keeping. But have all documents statement of capital gain and bank statements
(4) I need CA or just I register myself and fill reply of this notice.
Kindly guide me!
Dear Ashwani..Suggest you to kindly consult a CA and respond to this notice at the earliest. Do submit whatever details you have with you to CA.
Hi Sreekanth
I could not file my return for the AY 2014-15 and I received a notice asking my to furnish response in the compliance module.
I have two sources of income 1. My salary, which is TDS and 2. Bank interest (Rs. 2012, deducted by the Bank) these 2 sources I can see these 2 data points in the incometax website itself.
Could you please help me which reason I have to select here while filling the compliance form ? After submitting that form, can I submit the ITR now? If yes, can I do it using cleartax as a regular process?
Please let me know. Thank you!
Dear Mohan ..For FY (2013-14) Or AY 2014-15 ITR can be filed till 31st March, 2016.
Suggest you to take help of a CA and reply to the notice.
Thank you sir,
can you suggest me on compliance Related information tab is options
what i have to fill or choose in my case . i trade or invest money in mkt with my earning money small small saving in last years and fund from family . is this options asking fund source or result of trade like stt-01,02,03 i have loss and no income /salary from any other . so what i choose? i know you have advised me for CA...but for confidence and clarity knowledge purpose requesting a guide !
if source then saving if result then below taxable income in my case i have loss.
Options: Self – Investment/expenditure is out of exempt income,
Self – Investment/expenditure is out of accumulated savings,
Self – Investment/expenditure is out of gifts/loans from others,
Self – Investment/expenditure is out of foreign income,
Self – Income from transaction is exempt,
Self – Income from transaction is below taxable income,
Self – Income from transaction relate to different AY,
Self – Not known,
Other PAN,
Not Known,
I need more information)
Dear Mr Sreekanth, I am aged 72 years & retired long time back ( I dont file Tax returns as income from Deposits very less) and have got a IT notice indicating "Non-filing of Income Tax Return" and refers to a "Time Deposit exceeding Rs 2,00,000 during 2013-14 Financial year.
I have doubts which of the below Option should be used as part of submitting compliance :-
1. Self – Investment/expenditure is out of exempt income,
2. Self – Income from transaction is exempt,
3. Self – Income from transaction is below taxable income,
Request your kind advise so that I can reply Income Tax department. Your input is highly appreciated.
Dear VENKAT Ji,
I believe that you may opt for 'Self & Investment/ expenditure is out of accumulated savings'. This option may be more apt for you, kindly review it.
Dear Mr Sreekanth, Thanks very much for the clarification. You are in the best position to advise.. I was thinking that since most of my deposits are from my gratuity, I should choose the "Option 1.Self – Investment/expenditure is out of exempt income".. Accumulated savings also seems to fit in...I think I will go with your recommendation. Once again thanks a lot for timely response.
SIR In Related Information Summary Tab:
Information code: TDS-192A
Information Related To: ??? (
Options: Self – Investment/expenditure is out of exempt income,
Self – Investment/expenditure is out of accumulated savings,
Self – Investment/expenditure is out of gifts/loans from others,
Self – Investment/expenditure is out of foreign income,
Self – Income from transaction is exempt,
Self – Income from transaction is below taxable income,
Self – Income from transaction relate to different AY,
Self – Not known,
Other PAN,
Not Known,
I need more information)
Information code: TDS-192B
Information Related To: ??? (Same option mentioned for TDS-192A)
Please let me know which option I need to select form above mentioned options.
Thanks in advance.
Dear RAJEEV..You are the best person to identify the right option. These options are self-explanatory.
I beg to get clearification on High Value item saying deposit or withdrawals Rs 50 lac in year at currect account.The thing uncleared is that this 50 lac will run singly with deposit and withdrawals or seperate 50 lac for wd or deposit ie total one crore.
Dear Mr Ahuja,
Cash deposits or withdrawals aggregating to Rs 50 lakh or more in a financial year in one or more Current Account of a person will have to be reported by the bank to the I-T authorities. It can be one-time deposit/withdrawal or multiple deposits/withdrawals.
Kindly read: How Income Tax Dept tracks High Value Financial Transactions?