Income Tax Notice: Big Update! Notice sent to thousands of taxpayers, taxpayers have 30 days time

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New Delhi: Goods and Services Tax (GST) officials across the country have sent thousands of notices to taxpayers claiming shortfall in tax payments for FY 2018.

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The deadline for issuing notices is September 30 and taxpayers have been given 30 days to respond to these automated notices.  According to the report, central and state GST officials have sent these notices in the last fortnight. These notices mainly relate to mismatch in GST output and liability, input tax credit, ineligible tax credit claims and reversal of credit in case of exempted supplies. Tax officials can send notice even after September 30, but they will have to prove the case of tax evasion or fraud on behalf of the taxpayer.

Tax experts said this will lead to an increase in litigation in the next three months, while the cash flow of companies will be affected as they will have to deposit 10% of the total liability as deposit to file appeals. Tax expert Bipin Sapra, partner at EY, said that given that the decision deadline for these show cause notices is December 31, we will see a lot of litigation in the next three months.

PwC partner Pratik Jain observed that many of the notices appear to have been issued without proper analysis of facts and figures. He said many of them should be removed later, although this would cause controversy and paperwork for the industry. Officials would like to plan ahead so that these incidents can be reduced.

Deloitte partner Mahesh Jaisingh said underpayment of tax on related party transactions, wrong claims of input tax credit, export status (including refunds given), and state-wise credit availment and distribution are some of the common areas of disputes.

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