Dear Mr Loyal Taxpayer, you have Rs 1.3 lakh due

Devendra Rajwar received a letter from the income-tax department asking him to cough up Rs 1.3 lakh of unpaid dues. Of this, Rs 28,000 alone was interest for failing to pay his tax in time.

Central Mumbai resident MN Parmeswaran got a letter demanding pending tax payment of Rs 863.

IT professional Shridhar Kuchien (name changed on request) too got a similar letter. And for him, it wasn’t the first time.

“Last year, I was shocked to get a similar letter and I immediately called my chartered accountant. He convinced me that there was
no trouble and that it was just a mistake due to something at the income-tax office not matching. This year, I knew what to do about it,” he says.

These letters being sent out as a result of the income-tax department moving on to a computerised system, wherein taxes cut by your employer and those with whom you share a business relationship get listed under your name.

The problem arises at the last link — where tax deducted by any organisation against your name has to appear. The system is not being able to connect the two fields, and hence, thinks you have not paid tax.

Therefore, an automatically-generated letter is sent to you, asking you to clear the amount, pay interest for the delay (1.5% per month) and a penalty (equivalent to tax amount). These letters come to you as “Intimation Under Section 143 (1) of Income-Tax Act.”

So, if you too receive a letter asking you to pay up tax you don’t owe, don’t worry, as it is in most cases just be an erroneous letter generated by the system.

Chartered accountants in the city have been complaining about the menace, as thousands of replies are required to be sent back to the income-tax department. “The client doesn’t pay us any fee for this, but we end up spending time on it,” one CA told DNA.

The tax department says these letters will continue for another three-four months, by when the system will be rectified. “We are moving towards a scenario where there is lesser interface between the (income-tax) department and the taxpayer. Everything is put on the system when you file tax, TDS is reflected in NSDL (National Securities and Depository) and the refund goes directly into the bank account. We are almost successful. There are some processing problems because of which the (tax) demands were generated. We have given instructions for rectifying that problem,” SSN Moorthy, chairman of the central board of direct taxes (CBDT) said in Mumbai.

Asked how long will it take to rectify the systemic problem, Moorthy told DNA, “It will take around three-odd months.”

In case you have received a letter, and do not owe any tax, you will
have to reply back telling the income-tax department that the claim is incorrect. If not done, chances are the ‘tax dues’ may be deducted from your refund. The procedure to reply is mentioned on the back of the letter sent to you.

You have to write a letter to the income-tax officer who has signed the letter sent to you. State as subject — Rectification under Section 154.

Say that the tax claimed on your PAN have already been paid and attach the proof to indicate the same — such as Form 16 in case of salaried people, tax challan used to pay taxes or tax deduction at source (TDS) certificate given to you.

“There is no need to come in person to the income-tax department and submit the letter. You can send it by post or courier the same to the address mentioned on the envelope,” an income-tax officer told DNA.