Income Tax Notice for Inconsistency in Salary Income and Form 26AS: Many salaried employees received an Income Tax Notice, a notification from the IT department, on May 6, 2018, informing them of a mismatch between salary income and Form 26AS in their ITR. This article discusses what the Internal Revenue Service considers to be the salary income. Examining Form 26AS, Form 16, and Form 12BA will help you understand why the IRS gave you notice. It’s primarily due to omitted information, such as professional Tax or allowances that aren’t taxed. If you agree to the change, you can make the necessary changes to your return by filling in the blanks. If you disagree, you can use e-proceedings to respond.
How to Agree to the Notice of Salary Income Inconsistency and Form 26AS
The Income Tax Notice is a notification from the Internal Revenue Service (IRS) about a discrepancy between salary income and Form 26AS in the ITR. In ITR2, the salary breakdown is not displayed correctly. You can object and cite a lack of HRA/Professional Tax as a justification. We propose agreeing because the issue is that the salary information is incomplete. There is no tax liability for filling in the blanks. You must file the updated return.
Select the e-Proceeding option from the drop-down menu.
- Please proceed to the next screen by clicking on the ‘Proceeding Name’ link.
- Click the Submit button under the answer.
- Choose between Agree/Partially Agree/Disagree as your response type.
- If you choose to Agree, The acknowledgement number of the most recent updated return you filed in response to the intimation will be auto-populated by the system.
- After you’ve selected “Agree,” click the “Submit” button. Additionally, you must file a revised return.
- The revised return must be filed under section Revised 139. (5). So, when asked a question, respond no. Do you intend to file under section 119(2)(b)/92CD?
When Form 26AS does not Match Income from Salary in ITR, you will Receive an Income Tax Notice
Let’s look at what the IRS considers salary income, and you’ll need to consult your Form 26AS, Form 16, and Form 12BA.
The total amount paid/credited in Form 26AS is the source of your salary income for the Internal Revenue Service. This amount is selected in the “Income under Salary” field by the Quick e-File ITR option on incometaxindiaefiling.gov.in for ITR1.
- The HEAD “SALARIES” (3-5) from Form 16 is not INCOME CHARGEABLE.
- It is not the employee’s “Income under the Head “Salaries” (other than from perquisites) 12BA (Form 12BA)
The total of perquisites is the income chargeable under the head salary.
So, if you look at Form 26AS and Part A, which includes the TDS data, your Salary Income should match the amount shown in the Total amount paid/credited.
This notification will be issued if your ITR income under Head Salaries does not match the Total Amount Paid/Credited in Form 26AS. In an ITR (Income Tax Return), Income from Salary is reported in two places: one in Income from Salary and the other in TDS information.
You have two alternatives for responding to the notice and 30 days to do it, so don’t rush.
- If you agree to the notice in whole or in part, you must modify your ITR. Income from Salary is reported in two areas on the ITR, or Income Tax Return: one in Income from Salary and TDS details, and the other in Income from Salary and TDS details.
- If you disagree, you can file an e-proceeding and respond as described here.
ITR and Form 26AS, Form 16, and Form 12BA for Salary Income
Let’s go over the differences between Form 26AS, Form 16, and Form 12BA.
Form 26AS, commonly known as the Annual Statement, is a consolidated tax statement that includes all tax-related information (TDS, TCS, Refund, and so on) for a PAN. It displays how much of your tax has been collected by the government and is compiled from various sources such as your pay, pension, interest income, and so on. Understanding Form 26AS and What to Verify in the Form 26AS? Form 26AS is examined in depth.
Form 26AS, Income from Salary
- When your employer deducts TDS, you will receive Form 16 as a TDS certificate. When an employer deducts TDS from a salary, the income tax legislation mandates that the employer give a certificate certifying the specifics of the Tax deducted and deposited.
- When an employee receives ‘perquisites’ from his job, he or she obtains Form 12BA from his or her employer.
Professional Tax
Professional Tax is a tax imposed by state governments in India on professionals. This professional Tax must be paid by every person who is earning a salary or practising a profession such as chartered accountant, company secretary, lawyer, doctor, and so on. Each state declares a slab, and the professional Tax is deducted according to these slabs. Some states and union territories do not levy a professional tax as well. Karnataka, Bihar, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, and Sikkim are the states that apply the professional Tax.
Employers deduct professional Tax from employees’ monthly paychecks. They must then pay it to the government or face penalties for failing to collect or pay the professional Tax.
Procedure for Submitting a Revised Return
Gather the necessary information to file a Revised Income Tax Return:
- Original Return Receipt No.
- Original Return Submission Date
Log in to the income tax filing website and select the ‘View Return’ option. You’d be able to see all of the electronic returns you’ve filed. Obtain the Ack. There is no number, and the filing date is unknown.
- Examine the original e-filed return for any discrepancies.
- Go to the website incometaxindiaefiling.com.
- Prepare your return the same way you did the first time, updating or filling in any information that was left blank.
- Go to the PART-A General section of the ITR with Filing Status, as illustrated in the image below (Fill Excel ITR form: Personal Information, Filing Status)
- If you want to know if the return is original or revised, choose R-Revised.
- Select Revised 139 for a return filed under section (5). So, when asked a question, respond no. Do you intend to file under section 119(2)(b)/92CD?
- When you file income tax returns for a financial year after the due date of submitting income tax returns and the due date of filing belated income tax returns has passed, you must use Section 119(2)(b).
- Enter the ITR-E-filing V’s acknowledgement receipt number, which you should have received after filing the original return.
If you Disagree with the Variance in Salary Income and Form 26AS
If you disagree with the differences in Income from Salary and Form 26AS, go to the income tax e-filing portal, click on e-proceedings, and then respond. You will see options to
- Agree with the option to file a revised return,
- Partially agree with the option to file a revised return, and
- Disagree with the option to file a revised return.