How to Draft Income Tax and GST Notice Reply

“Learn how to effectively draft replies to Income Tax and GST notices. Navigate recent tax law changes, faceless scrutiny, and utilize professional drafting skills. Ensure compliance, avoid defaults, and protect your interests. Expert advice from CA. Shiv Kumar Sharma.”

Current Government is focusing on increasing tax base of both direct and indirect taxes. They are taking steps to prevent tax evasion, tax leakage and try to minimize even the scope for tax planning also. They are trying to make such a structure that; everything will go in a structure manner that, if any one tries to move out of the structure then it can be easily tracked. Recent changes in income tax law like introduction of New Tax regime, use of artificial intelligence, increasing scope of SFT/ TDS/TCS transaction is an example of changes that are made in direct taxes to increase tax base.

Similarly, introduction of E- Way bill, E- Invoice under GST is an example of changes in indirect taxes. An in the past few years, we have also seen the impact of these changes and government revenue has been increased many fold in both direct and indirect taxes. All these changes have impacted the tax payers also. Now, receiving of Notice under Income Tax as well as under GST is becoming very common. Now, technology is becoming so superior that, as and when any one tries to escape taxes they are easily tracked and notice will be served very promptly.

When we receive any notice then, we start getting nervous and get confused what to do in this situation. Firstly, we should get out of this uncomfortable situation and try to read notice properly and assured our self that, we have to submit reply of this notice. Because, non compliance of notice under Income Tax and GST, make us deemed defaulter which we should avoid. Because, in case of default situation, department has the power to do Best Judgment assessment on the basis of information available with them.

Replying of a notice require good knowledge of law, presentation and drafting skills. If we lack in any of them, then we must take help of professional to avoid any litigation at later stage. Below are some common steps that we should take before replying to any notice under Income Tax and GST.

Read the Notice Carefully and find out the reason of receiving the Notice

When we receive notice then firstly we should read the notice carefully and analyze the root cause of notice. As soon as we find the root cause, we are trying to find the solution of this notice.

Start arranging the required documents

Normally, when department sent any notice then they mention the reason why they have sent you the notice. We have to arrange required documents available with us to give response of their query. As soon, we provide them the relevant information there are high chances of getting out of this troubling situation.

Draft to the point Reply and mention case law, if available

In the era of technology, government is trying to minimize face to face interaction of assessee and officer. Faceless Scrutiny under Income Tax Act is an example of this. Further, GST Department is also planning to introduce faceless GST Scrutiny. When, we have to deal with officer faceless then drafting of notice play a vital role in deciding the case. Because, in faceless cases, there is no option to express our emotions and concerns before the officer. We have to express our emotions and case through words only. If there is any drafting error and officer is unable to understand our view then case may be decided against us. So, reply should be crystal clear.

Provide Supporting Documents

To justify our claim on any topic, we must attach required supporting documents in our reply. If at the earlier stage, case is decided against us then we have option to appeal before higher authority and these documents become a supporting hand at that time.

Use Polite and Professional Language

While dealing with officer, we should use polite and professional language in our drafting. We should control our emotions while drafting. We should not use any foul language at any stage. Here, we have to present our case effectively, so that it does not go against us.

Be Aware about latest amendment in Laws

In the current era, both direct and indirect taxes are changing vary rapidly. Day by day new amendments are coming to remove the hardship faced by taxpayers. While drafting reply, we must aware about the law, in some cases, it was observed that, reply has been drafted on the basis of old law and then case is decided against the taxpayer.

Request for More time and more clarity about any query

As per law, the officer has to give proper time to the tax payer to give reply of his notice. If any information is required by officer, that requires more time in comparison to time given by him or we require some more clarity about the question asked by officer, then we should file an application with officer to get more time/ more clarity to submit our reply.

Author’s Note: There is no specified format to give reply of any notice. Reply has to be customized on the basis of information available with us and query raised by officer. But, above mentioned points must be considered to give a structured reply of any notice.

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Disclaimer: This article is for the purpose of information and shall not be treated as solicitation in any manner and for any other purpose whatsoever. It shall not be used as legal opinion and not to be used for rendering any professional advice. The author will not be held responsible for any lose, if occur after using above information. Kindly consult your professionals before taking any action. This article is written on the basis of author’s personal experience and provision applicable as on date of writing of this article. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of others readers. The Author “CA. Shiv Kumar Sharma” can be reached at mail –shivsharma786@gmail.com and Mobile/WhatsApp–9911303737