Salaried Employees Income Tax Notice: How to Resolve Tax Demands in 2025
Salaried Employees Income Tax Notice: Receiving an income tax notice can be unsettling. This is particularly true for salaried individuals. They assume that their taxes are diligently paid through the TDS system by their employers.
In India, the receipt of income tax notices for salaried employees has become a prevalent occurrence. This trend extends to individuals who solely rely on Form 16 for their tax obligations.
These individuals often assume that their employers have diligently fulfilled all their tax responsibilities.
Various factors can lead to the issuance of such notices. These factors include TDS discrepancies, inaccurate income reporting, or incomplete disclosures. Consequently, it is imperative for these individuals to promptly address and rectify these issues to ensure compliance with tax regulations.
Despite the best intentions, many salaried taxpayers receive income tax demand notices on an annual basis. This phenomenon arises from discrepancies, filing errors, or inconsistencies between Forms 16 and Form 26AS.
In this comprehensive guide, we will address the following questions:
- What is a Salaried Employees Income Tax Notice?
- Why do salaried employees get income tax notices?
- What is the income tax rate for salaried employees in 2025?
- How do I resolve my income tax notice?
- Step-by-step: How to solve an income tax demand notice online
- Tips to avoid future income tax notices.
💡 What is a Salaried Employees Income Tax Notice?
An income tax notice is a formal communication from the Income Tax Department of India. It is sent to a taxpayer in response to issues or queries arising from their tax return. For salaried employees, the most common types of notices include:
- Defective return notice under section 139(9)
- Intimation under section 143(1)
- Scrutiny notice under section 143(2)
- Income tax demand notice under section 156
Such notices pertain to tax mismatches. They relate to non-disclosure of income or errors in Form 16 or Form 26AS. Another notice topic could be the non-filing of ITR.
📌 Types of Income Tax Notice to Salaried Employees?
The various types of Income Tax Notices that can be issued by the Income Tax Department are as follows:
- Notice U/S 139(9): The income tax department serves this notice. They issue it when they find any return filed by the taxpayers to be defective. This is due to inconsistencies or errors. The majority of the taxpayers get this notice often due to returns filed hurriedly at the last moment.
- Notice U/S 142(1): This notice is served by the income tax department mainly due to two reasons. One is incomplete documentation, or when they ask for additional documents or clarification from you. Secondly, to remind you that you have not filed your income tax return.
- Notice U/S 143(1): The Income Tax department sends notice U/S 143(1) after preliminary assessment of the tax return. This notice informs taxpayers of tax owed or refund eligibility.
- Notice U/S 143(2): Notice U/S 143(2) is a notice for scrutiny. To verify the accuracy of the income tax return filed by you, a scrutiny notice is served on you.
- Notice U/S 156: This is an income tax demand Notice. A notice under this section summons the taxpayer to pay the due amount. It includes any penalties or tax dues payable by the taxpayer.
📋 Income Tax Notice to Salaried Employees
| 🧾 Section | 💬 Notice Type | 📄 Reason for Notice | ⚠️ Common Triggers |
|---|---|---|---|
| 🔷 139(9) | Defective Return Notice | Filed return is defective due to inconsistencies or missing information. | Rushed filing, missing form details, incorrect data. |
| 🟦 142(1) | Notice for Inquiry/Non-Filing | Issued for incomplete documentation or reminder to file ITR. | Failure to file return or missing support documents. |
| 🟩 143(1) | Preliminary Assessment Notice | Sent post-assessment to inform taxpayer of refund eligibility or tax owed. | Return processed automatically by CPC. |
| 🟨 143(2) | Scrutiny Notice | Issued for in-depth assessment to verify the correctness of income, deductions, or claims. | Discrepancies in return or high-value transactions. |
| 🟥 156 | Demand Notice | Demand for tax dues, penalties, or interest. Must be paid within stipulated time. | Under-reported income, tax dues not cleared. |
💡 Why Do Salaried Employees Receive Income Tax Notices?
While most salaried people rely on Form 16 and employer deductions, several factors can cause tax notices. Let’s understand what factors lead to these notices:
| Reason | Explanation | Notice U/S |
|---|---|---|
| Incorrect ITR Filing | Filed ITR-1 instead of ITR-2 when having capital gains | U/S 139(9) |
| Late or Non-Filing of ITR | ITR not filed by due date or skipped altogether | U/S 142(1) |
| TDS Mismatch | TDS reported by employer differs from that in Form 26AS | U/S 143(1) |
| Claiming False Deductions | Deductions under 80C, 80D, HRA, etc., not supported by proof | U/S 143(2) |
| Missed Reporting of Other Income | Interest income from FD or rental income not disclosed | U/S 148 |
| Employer Non-Compliance | Employer deducts TDS but fails to deposit it with the IT department | – |
💡 What is the Income Tax Rate for Salaried Employees in 2025?
As per the Union Budget 2025–26, salaried individuals can choose between two tax regimes:
✅ Income Tax Slabs FY 2025-26 (New Tax Regime)
| Income Slab | Income Tax Rate |
|---|---|
| 0 – ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Standard Deduction of ₹75,000 is available. No major exemptions (e.g., HRA, LTA, 80C) are allowed.
✅ Old Tax Regime for FY 2025-26 (Optional):
| Income Slab | Income Tax Rate |
|---|---|
| 0 – ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Includes deductions such as:
- ₹1.5 Lakh under 80C (PF, PPF, LIC, ELSS, etc.)
- ₹25,000 to ₹50,000 under 80D (Health Insurance)
- HRA, LTA, Home Loan Interest (Section 24)
💡FREE Download Income Tax Calculator (Excel) Below (AY 2026–27)
💡How Do I Resolve Income Tax Notice to Salaried Employees?
Step 1: It is advisable that you should not panic:
First, understand the nature of the Notice along with the section number. There is nothing to worry about unless you have done anything unlawful.
Each notice has a section number. Here’s what some of them mean:
📘 Income Tax Notice Sections
| 🔢 Section | 📝 Purpose |
|---|---|
| 139(9) | Defective Return —It needs correction |
| 143(1) | Intimation of Refund or Tax Demand |
| 143(2) | Scrutiny of return |
| 156 | Income Tax Demand — pay additional tax |
Step 2: Check the Notice Date and Deadline:
You usually have 15 to 30 days to respond or rectify issues. Delays can lead to penalties and interest.
Step 3: Compare Form 26AS and AIS:
Check the Annual Information Statement (AIS) and Form 26AS on the income tax portal to find mismatches.
Step 4: Log in to the Income Tax e-Filing Portal:
Use your PAN to log in and go to:
e-File > Response to Outstanding Tax Demand:
You’ll see details of the notice, amount, and reason.
Step 5: Submission of reply:
Once you go to the above section, submit your response or reply in response to the notice accordingly without fail.
💡 How to Solve Income Tax Demand Notice (Section 156)?
Here’s a step-by-step guide to solve the Income Tax notice served U/S 156:
✅ Option A: Demand is Correct — Pay It
- Go to the TIN NSDL Portal
- Select “Challan 280” → Fill PAN, Assessment Year, and select “Self-Assessment Tax”
- Pay via Net Banking or UPI
- Download the Challan Receipt and save it
- Go back to e-Filing Portal → Submit Payment Details under “Response to Outstanding Demand”
✅ Option B: Demand is Incorrect — Disagree
If demand is due to:
- TDS not reflecting in 26AS (but you have Form 16)
- Income shown double
- Clerical error
Then:
- Click “Disagree with Demand”
- Choose appropriate reasons and upload supporting documents:
- Form 16
- Salary Slips
- Form 26AS
- Challan copy (if already paid)
Finally, CPC will reevaluate your case.
💡 Sample Reasons to Disagree With Income Tax Notice to Salaried Employees
Due to the following reasons, one should disagree with the income tax notice to salaried employees:
| Reason | Documents to Upload |
|---|---|
| TDS Already Deducted | Form 16, Form 26AS |
| Income Shown Incorrectly | Salary slips, computation |
| Already Paid Demand | Challan copy, bank statement |
| Filed Revised Return | ITR Acknowledgement |
✅ How to Solve Income Tax Demand Notice Without CA Help?
From time immemorial, many salaried taxpayers have believed that only a tax consultant i.e. a CA only can resolve income tax notices. But it is not completely true. You can also solve these issues online without a CA help.
Now, it’s quite manageable online if you follow the below steps:
- Keep your PAN, Aadhaar, and ITR credentials ready,
- Maintain all Form 16s, 26AS, and salary slips,
- Use ClearTax, TaxBuddy, or incometax.gov.in directly,
- Save PDFs/screenshots of everything you submit
💡 Pro Tips to Avoid Income Tax Notices in the Future
- Always Match Form 16 with Form 26AS:
Ensure your employer’s TDS details in Form 16 are correct. They should match exactly in Form 26AS. If there is any mismatch, you are definitely inviting trouble for yourself. - Disclose All Incomes:
You should disclose all income sources. This includes income from FD, savings interest, and rental income. It also includes stocks, mutual fund gains, and freelance income. - Disclose Exempt Income Too:
The majority of taxpayers make one critical mistake. They do not disclose their exempted incomes. This includes PPF interest, ETF maturity, or agricultural income. - Choose the Right ITR Form:
Many taxpayers file their income tax returns at the last moment. This often leads to choosing the wrong ITR form. This reflects that you have committed mistakes from the beginning of the return filing process. Don’t file ITR-1 if you have capital gains or foreign assets. - Avoid Inflated Deductions:
You should claim only genuine 80C, 80D, HRA exemptions backed by proof. Don’t overclaim HRA or fake 80C receipts. These are red flags for scrutiny. - Verification with AIS & TIS:
Verify all your annual deductions, incomes, mutual fund investments, and Fixed Deposits. Check the details given in the Form 16A. Also, verify TDS credits and almost everything else with the AIS & TIS uploaded by the income tax department.
💡 Salaried Employees Income Tax Notice: Real Life Example
Real-life Case: Mr. Rajeev is a salaried employee in Bengaluru. He received a demand notice of ₹22,500 under Section 143(1). This was due to a mismatch in TDS.
- His employer had deducted TDS and issued Form 16.
- But the employer failed to deposit the TDS on time.
- The tax department didn’t find it in Form 26AS.
✅ Solution:
- Mr. Rajeev contacted HR and received confirmation that the TDS had been deposited later.
- He downloaded the updated Form 26AS, which showed the correction.
- Uploaded Form 16 + 26AS and submitted a “Disagree” response online.
👉 The issue was resolved in 20 days, and the demand was cancelled.
💡 Salaried Employees Income Tax Notice: Final Words
Receiving an Income Tax Notice to Salaried Employees isn’t always a cause for alarm. An income tax notice to salaried employees is a formal communication from the Income Tax Department. It asks for clarification, additional information, or payment.
This happens when discrepancies are found in the employee’s tax return or financial information. Even if your salary is your only source of income, you may receive one of these notices:
It’s essential to understand that not all notices mean trouble. Some are just routine checks or corrections.
Even seemingly minor omissions can lead to a Salaried Employee Income Tax Notice. The Annual Information Statement (AIS) meticulously records all transactions, including credit card expenditures, mutual fund investments, and property acquisitions.
🔑 Salaried Employees Income Tax Notice: Key Takeaways:
- Always reconcile Form 16 and Form 26AS before filing ITR
- Use the New Tax Regime or Old Regime based on your deductions
- Respond to notices online with documents
- Pay tax dues quickly if the demand is valid
