2 min
11 March 2025
When you receive an income tax demand notice section 156, it can feel overwhelming. This formal communication from the Income Tax Department signals that the tax authorities have found discrepancies in your tax filing. The income tax demand notice section 156 requires immediate attention to avoid penalties and legal complications.
Understanding how to respond to an income tax demand notice section 156 is essential for every taxpayer in India. The notice typically means you might need to pay additional tax or clarify information about your filing. Prompt action can save you from unnecessary stress and financial burden.
This article will guide you through everything you need to know about handling an income tax demand notice section 156, including penalties, appeal procedures, and proper response methods. We will also explore how financial planning, including home loan options from Bajaj Housing Finance, can help you manage your finances better while dealing with tax matters.
What is an income tax return demand notice?
An income tax demand notice section 156 is an official document issued by the Income Tax Department when they determine that a taxpayer has not paid the correct amount of tax. This notice specifies the additional tax amount that you need to pay based on the assessment completed by the tax officer.
The income tax demand notice section 156 is issued under the authority of the Income Tax Act, 1961. It includes details such as the assessment year, the amount demanded, and the due date for payment. You must understand this notice thoroughly as it has legal implications if ignored or mishandled.
Receiving an income tax demand notice section 156 does not automatically mean you have made an error. Sometimes, it could be due to mismatched information or calculation differences that need clarification.
Reasons of receiving income tax return demand notices
There are several common reasons why you might receive an income tax demand notice section 156:
Ignoring an income tax demand notice section 156 can lead to severe consequences. The tax department imposes penalties for non-compliance that increase with time.
The penalty structure for late response to an income tax demand notice section 156 includes:
After receiving an income tax demand notice section 156, follow these steps:
First, carefully verify all details in the notice, including the assessment year and the demand amount. Compare these figures with your records to identify any discrepancies.
Next, collect all relevant documents that support your tax return, such as income statements, investment proofs, and deduction certificates.
Consider consulting a tax professional to understand the implications of the notice and prepare an appropriate response. Their expertise can help navigate complex tax matters.
Responding to an income tax demand notice section 156 requires a structured approach. The process has been simplified through the online e-filing portal.
To respond effectively, log in to the Income Tax e-filing portal and navigate to the "Response to Outstanding Tax Demand" section. Here, you can view all pending demands against your PAN.
If you identify errors in your original return after receiving an income tax demand notice section 156, you may need to file a revised return.
The process of filing a revised return involves submitting a new return with corrected information. This can be done through the e-filing portal within the specified time limit.
Understanding the current income tax slabs is crucial when dealing with an income tax demand notice section 156. The tax slabs for FY 2025-2026 help in calculating your correct tax liability.
The tax structure allows taxpayers to choose between the old regime with deductions and the new regime with lower rates but fewer deductions.
Using an income tax calculator can help you determine which regime would be more beneficial based on your income and investment profile.
How to apply for Bajaj Finserv Home Loan
While managing tax matters, planning your finances wisely includes considering beneficial options like home loans. Bajaj Housing Finance offers home loans with competitive interest rates starting from 7.99%* p.a.
To apply for a Bajaj Housing Finance Home Loan:
Before applying for a home loan, check if you meet the eligibility criteria set by Bajaj Housing Finance:
While dealing with tax matters, it is equally important to plan your finances wisely. A home loan from Bajaj Housing Finance offers an excellent opportunity to build assets while enjoying tax benefits on both principal and interest payments.
Bajaj Housing Finance Home Loans come with several advantages:
For those managing both tax obligations and financial goals, Bajaj Housing Finance provides a comprehensive solution with its customer-friendly policies and transparent processes.
Take the first step towards owning your dream home while optimising your tax planning by applying for a Bajaj Housing Finance Home Loan today.
Understanding how to respond to an income tax demand notice section 156 is essential for every taxpayer in India. The notice typically means you might need to pay additional tax or clarify information about your filing. Prompt action can save you from unnecessary stress and financial burden.
This article will guide you through everything you need to know about handling an income tax demand notice section 156, including penalties, appeal procedures, and proper response methods. We will also explore how financial planning, including home loan options from Bajaj Housing Finance, can help you manage your finances better while dealing with tax matters.
What is an income tax return demand notice?
An income tax demand notice section 156 is an official document issued by the Income Tax Department when they determine that a taxpayer has not paid the correct amount of tax. This notice specifies the additional tax amount that you need to pay based on the assessment completed by the tax officer.
The income tax demand notice section 156 is issued under the authority of the Income Tax Act, 1961. It includes details such as the assessment year, the amount demanded, and the due date for payment. You must understand this notice thoroughly as it has legal implications if ignored or mishandled.
Receiving an income tax demand notice section 156 does not automatically mean you have made an error. Sometimes, it could be due to mismatched information or calculation differences that need clarification.
Reasons of receiving income tax return demand notices
There are several common reasons why you might receive an income tax demand notice section 156:
- Calculation errors in your tax return: The tax department might find mathematical errors in your calculations, leading to underpayment of tax. These errors often occur when manually calculating deductions or exemptions.
- Mismatch in reported income: If your reported income does not match the information available with the tax department from sources like Form 26AS or Form 16, you may receive an income tax demand notice section 156.
- Incorrect claim of deductions: Claiming deductions without proper documentation or beyond permissible limits can trigger scrutiny and result in a demand notice.
- Failure to report all income sources: Omitting income from investments, rental properties, or other sources can lead to discrepancies identified by the tax department.
- TDS credit discrepancies: Differences between TDS claimed in your return and what is reflected in the tax department records often result in demand notices.
- High-value transactions not reported: Large transactions that appear in Annual Information Return (AIR) but are not adequately explained in your tax return may prompt a notice.
Ignoring an income tax demand notice section 156 can lead to severe consequences. The tax department imposes penalties for non-compliance that increase with time.
The penalty structure for late response to an income tax demand notice section 156 includes:
- Interest charges: You will be charged interest at 1% per month on the unpaid tax amount under Section 220(2) until the payment is made.
- Penalty for defaults: The department can levy penalties ranging from 50% to 200% of the tax amount under various sections of the Income Tax Act.
- Prosecution in severe cases: Continued non-compliance may lead to prosecution, resulting in imprisonment ranging from three months to seven years.
- Recovery proceedings: The tax department can initiate recovery proceedings, including attachment of bank accounts or property.
After receiving an income tax demand notice section 156, follow these steps:
First, carefully verify all details in the notice, including the assessment year and the demand amount. Compare these figures with your records to identify any discrepancies.
Next, collect all relevant documents that support your tax return, such as income statements, investment proofs, and deduction certificates.
Consider consulting a tax professional to understand the implications of the notice and prepare an appropriate response. Their expertise can help navigate complex tax matters.
- Check Form 26AS: Verify if the TDS credits claimed match with what is reflected in your Form 26AS.
- Review calculation: Re-calculate your tax liability to confirm if there are any genuine errors.
- Prepare supporting documents: Gather all relevant documents that support your original tax filing position.
- Plan your response: Decide whether to pay the demand or contest it based on your review.
Responding to an income tax demand notice section 156 requires a structured approach. The process has been simplified through the online e-filing portal.
To respond effectively, log in to the Income Tax e-filing portal and navigate to the "Response to Outstanding Tax Demand" section. Here, you can view all pending demands against your PAN.
- Online response: Select the relevant demand notice and choose whether you agree, partially agree, or disagree with the demand.
- Submit evidence: Upload supporting documents if you are contesting the demand.
- Response timeframe: Ensure you respond within 30 days of receiving the income tax demand notice section 156.
- Track status: Regularly check the status of your response in the e-filing portal.
If you identify errors in your original return after receiving an income tax demand notice section 156, you may need to file a revised return.
The process of filing a revised return involves submitting a new return with corrected information. This can be done through the e-filing portal within the specified time limit.
- Eligibility check: Ensure you are within the time limit for filing a revised return (generally before the end of the assessment year or before completion of assessment).
- Complete information: Include all details from the original return along with the corrections.
- Reference original return: Mention the acknowledgment number of the original return when filing the revised return.
- Verification: Complete the verification process through digital signature or by sending the physical ITR-V form.
Understanding the current income tax slabs is crucial when dealing with an income tax demand notice section 156. The tax slabs for FY 2025-2026 help in calculating your correct tax liability.
The tax structure allows taxpayers to choose between the old regime with deductions and the new regime with lower rates but fewer deductions.
| Income range | Tax rate |
| Up to Rs. 4 lakh | Nil |
| Rs. 4 lakh to Rs. 8 lakh | 5% |
| Rs. 8 lakh to Rs. 12 lakh | 10% |
| Rs. 12 lakh to Rs. 16 lakh | 15% |
| Rs. 16 lakh to Rs. 20 lakh | 20% |
| Rs. 20 lakh to Rs. 24 lakh | 25% |
| Above Rs. 24 lakh | 30% |
Using an income tax calculator can help you determine which regime would be more beneficial based on your income and investment profile.
How to apply for Bajaj Finserv Home Loan
While managing tax matters, planning your finances wisely includes considering beneficial options like home loans. Bajaj Housing Finance offers home loans with competitive interest rates starting from 7.99%* p.a.
To apply for a Bajaj Housing Finance Home Loan:
- Click on the 'APPLY' button on the home loan page.
- Enter your name, mobile number, and employment details.
- Select your preferred loan type (fresh home loan, balance transfer, or top-up loan).
- Verify your phone number through OTP and provide additional details like monthly income and required loan amount.
- Enter your date of birth, PAN number, and other requested information.
- Submit your application and wait for a representative to guide you through the next steps.
Before applying for a home loan, check if you meet the eligibility criteria set by Bajaj Housing Finance:
- Nationality: You must be an Indian citizen residing in India to qualify for the home loan.
- Age requirements: Salaried applicants should be between 23-67 years, while self-employed professionals should be between 23-70 years (upper age limit at loan maturity).
- Credit score: A CIBIL Score of 725 or higher is ideal for home loan approval and better interest rates.
- Occupation status: You should be a salaried employee, professional individual, or self-employed individual.
- Documents required for home loan include KYC documents, income proof (salary slips or P&L statements), business proof for self-employed applicants, and bank statements for the last six months.
Conclusion
Managing an income tax demand notice section 156 requires prompt action and proper understanding of the tax laws. By following the guidelines outlined in this article, you can effectively respond to notices and minimise penalties.While dealing with tax matters, it is equally important to plan your finances wisely. A home loan from Bajaj Housing Finance offers an excellent opportunity to build assets while enjoying tax benefits on both principal and interest payments.
Bajaj Housing Finance Home Loans come with several advantages:
- Competitive interest rates starting from 7.99%* p.a.
- Loan amounts up to Rs. 15 crore*
- Flexible repayment tenure up to 32 years
- Quick approval within 48 hours*
- No foreclosure fees for individual borrowers with floating interest rates
- Balance transfer facility with top-up loan options up to Rs. 1 crore
For those managing both tax obligations and financial goals, Bajaj Housing Finance provides a comprehensive solution with its customer-friendly policies and transparent processes.
Take the first step towards owning your dream home while optimising your tax planning by applying for a Bajaj Housing Finance Home Loan today.
