Taking the shock out of the system

In a landmark move on November 9, 2023, the Income Tax Department ushered in the Demand Facilitation Centre (DFC) to streamline the resolution process for outstanding tax demands. This development is a significant stride towards enhanced digitalisation and improved taxpayer interaction.

The recent surge in tax notices, with approximately 100,000 issued in July 2023 alone, prompted the launch of the DFC to assist and expedite the resolution of outstanding demands. The DFC serves as a vital bridge between taxpayers and the I-T Department.

Notices for outstanding demands are currently dispatched to the taxpayer’s registered email addresses. However, it is not uncommon for these notices to go unnoticed or for the taxpayers to delay their responses. Importantly, receiving an income tax notice should not be automatically construed as an implication of wrongdoing. Instead, there may be some discrepancies between the taxpayer’s records and the information available with the tax authorities which can be resolved by filing accurate documentation and explanation with the tax authorities.

Acting as a mediator, the DFC guides taxpayers on the optimal approach to responding to outstanding notices. The system maintains a comprehensive record of all communications, accessible through the taxpayer’s income tax portal, thereby formalising the notice and making the response time frame enforceable.

To assist taxpayers further, the DFC has established this help centre for addressing queries related to outstanding demand notices. Genuine communications are conducted through designated channels — calls from +918216671200 and emails from taxdemand@cpc.incometax.gov.in. An alarming trend has surfaced — fraudulent entities exploiting unsuspecting individuals by posing as DFC representatives and coercing them into making payments for fictitious tax demands. So, communication from alternative numbers or email addresses should be treated with suspicion, particularly if requests for sensitive information, such as e-filing login credentials, bank account numbers or debit and credit card numbers are made. Discerning legitimate DFC communication from scams is crucial to avoiding potential financial harm.

Also, if a taxpayer receives a call or email allegedly from the DFC, the taxpayer can verify the communication through the income tax portal. A tab for “history of communication” is available on the portal which provides a definitive record of all communication attempts made by the Department, hence, confirming the legitimacy of the call or email. It is crucial to note that DFC officials never demand outright payment; their role is to guide taxpayers in resolving outstanding demands through a structured process.

Once identified as a legitimate communication, it is imperative to ensure prompt compliance and resolution of any outstanding tax demands. Failure to resolve these demands empowers the Income Tax Department to offset the demand against any pending refunds or initiate recovery proceedings. Once a tax demand is officially confirmed, online resolution options may become challenging, necessitating direct follow-up with the pertinent income tax officials. Importantly, it is not admissible for a taxpayer to assert non-receipt of any communication as a defence for being unable to respond to the notice.

As the Income Tax Department strives to deepen its digital engagement with taxpayers, the DFC emerges as a pivotal instrument. Notices that might otherwise be overlooked in emails are now deemed officially received when the DFC contacts taxpayers directly, ensuring not only timely compliance but also facilitating efficient resolution. Presently operational in 12 cities, including prominent hubs such as Mumbai, Delhi, Karnataka, and Punjab and amidst the ongoing scams, taxpayers must remain vigilant, cross-verify all communications, and ensure timely resolution to safeguard themselves from potential scams in this evolving landscape.

The process for resolving outstanding demands is facilitated through the taxpayer’s individual tax portal, accessible online. The taxpayer is presented with the choice of either affirming the outstanding demand, thereby confirming its validity, and rendering the amount payable, or dissenting and providing the necessary documentation to address the query.

In instances where the taxpayer disagrees with the demand and submits the required documents, the query is evaluated by tax officials. If the provided documentation satisfies the tax authorities, the demand is resolved, and if applicable, a refund is processed. Should additional clarification be necessary, tax officials will request further documentation from the taxpayer to facilitate a comprehensive resolution process.

The author is Partner, Nangia Andersen India

(With inputs from Neetu Brahma)

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