NRI Got an Income Tax Notice? What Should You Do?

Receiving an income tax notice while living outside one's country could cause anxiety, particularly when the reason for receiving the same is unknown to them. An income tax notice for NRI could pertain to missing details, wrong tax information, or tax dues. The proper course of action to be taken varies from one kind of notice to another depending upon the reason for the issuance of such a notice. The NRIs should read the notice thoroughly, see when the deadline is, and arrange the documents. My Startup Solution can help NRIs to know about their tax liability and provide an appropriate response.

Why Did You Receive an Income Tax Notice as an NRI?

An NRI income tax notice in India can be sent by the Income Tax Department for any discrepancy, any outstanding tax, or for any problem in filing your return. The receipt of a notice does not necessarily indicate an error on your part. It could just be to seek more information from you. Knowing why you have received the notice is the key to handling it right.

Common Reasons NRIs Receive Income Tax Notices

The following are some of the various possible causes for sending out notices to NRIs by the Income Tax Department.

• Mismatch in income details
• TDS differences
• Unreported income
• Incorrect residential status
• Outstanding tax demand
• Incorrect tax credit claims

The above NRI tax filing issues must be verified from your return forms, bank accounts, and other documents before drafting a response.

How to Check and Verify an Income Tax Notice?

Before you decide to reply to the notice of the income tax department sent to an NRI, verify if it is a valid notice. You can log into the official website for Income Tax e-filing, i.e., https://www.incometax.gov.in/ and check the notices/orders/ proceedings.

• Open the official website.
• Find out the notice with the reference number and verify.
• See if there is any Document Identification Number (DIN), if needed.
• See which assessment year and reason the notice is issued for.
• See the response date mentioned.
• See the income and taxes mentioned in the notice.
• Check the legitimacy of the notice by using the official service of the department.
• Take help from a CA if something is not clear.

Do not open any dubious links or share your PAN, password, or bank details from dubious sources. In case of any queries regarding the notice, do consult professionals for guidance.

How to Respond to an Income Tax Notice as an NRI?

A timely and precise Income tax notice reply for NRI could help in solving the problem and avoiding further problems. The following are the required steps to be followed:

1. Read the notice: Identify the reason behind the notice and understand what is expected by the department.
2. Determine the deadline: Determine the latest date by which you can submit your response. Don’t wait till the last date to give your response.
3. Verify your income tax records: Cross-check the notice with your income tax records, Form 26AS, AIS, and others.
4. Collect all the required documents: Keep all the documents related to your income, tax deduction, and other financial transactions with you.
5. Answer to the notice: Respond to all the queries posed by the notice.
6. Answer to the notice in an appropriate way: Submit your answer using the appropriate e-filing service for your notice.
7. Keep a copy of the answer to the notice: Get the copy of your response along with proof of submission.

The ideal NRI tax notice response would be one that is directly related to the issue mentioned in the notice. When there is a complex assessment, substantial tax demand, and penalties mentioned in the notice, it is recommended to seek advice from a chartered accountant.

Documents Required to Reply to a Tax Notice

Some of the most commonly asked for documents are as follows:

• A copy of the income tax notice 
• PAN number and income tax filing
• Form 16 or TDS certificate, wherever required 
• Form 26AS and Annual Information Statement (AIS) 
• Proof of bank statements and income 
• Proof of tax payments 
• Rent agreement or property sale papers, if any 
• Passport/travel information and other proofs of residence, wherever required

All these Documents Required to Reply to a Tax Notice should corroborate the explanation provided by you in your reply. Only those documents which are relevant to your case should be enclosed in your reply.

What Happens If You Ignore an Income Tax Notice?

Failure to address an Income tax notice for non-residents can make it harder for you to deal with the issue. Depending on the nature of the notice, the Department will assess your tax based on the information at hand, issue a tax bill or even commence penalties where applicable under the law.

There will also be a loss of the chance to justify the discrepancy and offer proof within the prescribed period of time. The implications will be determined by the nature of the notice, facts of the case and legal provision involved.

It is important not to think that the notice can be ignored even if you reside outside the country. Review it promptly and seek professional help if you cannot understand the requirements or meet the deadline.

My Startup Solution can help you in analyzing tax notices, preparing documents, and guiding you regarding responses to such notices. Call us for a professional help at +91-7081220800