Video transcription below (auto-transcription may cause some errors):
Hello, and welcome. In this video, I’m sharing what NRI should do when they receive a tax notice from the Indian tax department. Okay. Now see some tips I’m just sharing. Right?
Now, see, the important thing to understand is that, in the one of the earlier videos I discussed about significant financial transactions, which the financial institutions are required to disclose to the income tax department in India, which is rule 114 e. Right? So against that particular rule, financial institutions like banks, mutual funds, and all these things, institutions have to report certain information, significant financial transactions, mostly about 10 lakhs. Right? They have to report it to the, income tax department.
Then there are certain common reporting standards for intercountry information exchange. Right? They are then AI. Right? The increasing use of AI in the income tax department.
A lot of data analytics tools now that are available. So the important, thing that we need to understand is that now there is no such thing as kind of a, you know, privacy. Right? So is this too much, you know, actionable information which is available with the tax authorities for you, I mean, pertaining to your finances, pertaining to your, you know, transactions. So it’s like gone are the days when you can, like, do transactions in India or, you know, and expect and this is, like, across countries, this is happening.
Right? And even cross border transactions. Right? Even cross border transactions. So between US or India, you know, and, it’s you can’t, like, just think that, you know, I do a transaction and then it’ll no one will be able to catch that.
So that is no more the thing. So that’s why the importance of being honest, with your, with the tax authorities that, okay. This is my income. This is what, according to me, is exempt. This is according to me.
It’s taxable. Firing a tax return every year, maintaining that continuity, and that helps. Being transparent and being open is very, very helpful. But you still can receive a tax notice, especially if you have done any significant transaction. See the, earlier video on when you can get a tax notice on the transaction that I’ve listed.
Right. So if you have done any of those transactions, highly likely that you can get a tax notice and especially if you have not filed a tax return in India for that year. So, basically, if you get a tax notice, first of all, do not ignore that. Right. Do not ignore that because the income tax department will not send you a tax notice just because there is no information that is available.
Right? There will be information that you’ll have. So if you it’s a tax return for non filing of tax info non filing of return, definitely. You must not have filed or if even if your file, it is not registered in their records. Right?
So they have some credible information. Only then they are, sending a tax return. So first, they send the return for information. You provide information, then if you they are not satisfied with the information, they will give new requirements, or they will call you for an explanation. Right?
So there is some credible information. This is that that notices then. If you don’t send the notice, then it becomes a demand. And from there, it becomes very difficult to convince the tax department that, sorry. This was the reason I did not file.
Please don’t levy a demand. That is becomes difficult. At the notice stage itself, you should rectify. Do not panic. So sending that tax notice doesn’t mean, you know, it’s like some big liability will come on you.
No. Yes. If you have kind of hidden the, you know, the taxation or, if you’re or not disclosed willfully, then you need to have then you need to worry if you receive a tax notice. But if you have not done anything like that, then please do not panic. Only information is sought, and very few notices, and especially those which are not responding, they translate into a tax refund or a penalty.
Now if you don’t respond, what happens is so there is a specific period within which you need to respond. Now if you don’t respond, then under the income tax act section 144, the sourcing officer has the power to do a best judgment assessment. Right? And the notice will get converted into demand. Right?
And that once the demand is there, you have to pay. Else, you have to then file a appeal, right, which is then a complicated process. So first, you have to check the notice. Right? And there, you can take help of a CA.
Right? A a CA who is well versed with the assessment, process. So what happens is most I’ll not say most of the times, but sometimes, either the assessing officer who has issued the notice to you doesn’t have the proper discretion, does doesn’t have a proper jurisdiction on the case, doesn’t have the proper approvals, and all that is not very clearly coming out. The notice is either tie time barred notice. Right?
For example, it pertains to a year, which is like, you cannot open the assessment for that particular year. All those things are there. Check what is the kind of information that they’re asking. So now more most of the times, what is happening is instead of sending a paper notice in the e income tax e filing portal that you have so if you are a nonresident and you don’t have an access to the income tax e filing portal, I’ll suggest that you must get, register yourself on the e-filing portal. So nowadays, most of that information kind of, requirements, they post it in the portal.
So, again, you’ll receive an email where you’ll be asked to log in in the portal, and then you can just against the particular, transaction, you have to just update your response. They only want your response. They don’t even want any attachment or something. They just want your response, and most mostly, it gets closed there. Right?
So always, always keep checking your income tax portal once in 3 months at least to see if there is any notice or anything that has come in, and then you can respond. And, also, check your emails. Also, update your email and everything properly on the income tax portal. Lot of times, they do people don’t update the information, their email, and then they don’t receive email. Maybe they would update their address.
They don’t receive it on their address, and then the order gets issued. And then then it becomes very difficult to say that I forgot to update and everything. So first, check the notice information, whether notice is timed valid or not or it is time barred, whether the assess PO possesses jurisdiction because many cases, it can just be rejected there and there if it is time barred. Right? Check and mark the date that it is received because the timeline for responding starts from there.
So always keep the outer cover. If you have received a paper notice, keep it with you. Nowadays, mostly, it’s the online thing. Now but while replying, be transparent. Do not try to hide facts.
The more so it’s like if you say one lie, then you have to for covering up the that lie, you have to say 10 lies. For covering up those 10 lies, you have to again say more 100 lies. So don’t go into that thing. Be transparent. If you have made a mistake see, ignorance of law is no excuse.
Right? That’s the settled principle of law. So if the income had to be, reported and it had to be taxed and you have not paid the tax, then better be transparent and say that, yes, this was the case, and this was the reason I was whatever you, kind of, you know, give the story. Right? But, do not try to hide the facts because they have information from many sources.
And then if you they levy concealment penalty, that is a much, harsher penalty. Right? Okay. Update your email. And as I said, your email physical address should be clearly updated on the income tax department portal, and, also, check the income tax department portal once a quarter.
If you deal with the CA, then you can give the details to the CA, then, you know, the CA can at least once in a few months, he can go and check if there is any tax notice or not. Right? So important thing is if you’re a nonresident and you have assets investments in India, always helpful to have a CA. Maybe you have to pay some few 1,000. Right?
But always helpful to some have someone beside you who can help you in such cases if they arise. Minor tax info that you definitely you can reply for yourself. But for complex requirements, for complex tax notices, always helpful to engage a professional, a tax professional, rather than doing and messing it up, doing yourself and getting panicked and everything or hiding stuff, Better engage a CA and let the CA handle the case for you. Right? So this is it.
I hope this, some tips that I have shared, they are helpful for you. If you have any queries, anything you want to share or any queries, do please share in the comment section. Thank you so much for watching this video. Thank you. Bye.