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How to respond to Non-filing of IT Return Notice?

by | Jun 11, 2024 | Income Tax | 0 comments

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Important Keyword: Income Tax Compliance, Income Tax Website, IT Notice.

What is Non-Filing Monitoring System (NMS)?

The Non-Filing Monitoring System (NMS) is a system developed by the Income Tax Department to identify individuals who are required to file taxes but have not done so. Here’s how it works:

Identification of Non-filing

The NMS identifies people who are liable to file taxes—those with an annual income exceeding ₹2,50,000—but have not filed their tax returns. The system leverages several information sources to spot these non-compliant taxpayers:

  • AIR (Annual Information Return): Filed by financial institutions, providing details of high-value financial transactions.
  • CIB (Centralised Information Branch): Collects and processes data related to potential tax evaders.
  • TDS Statements: Details of tax deducted at source, which help in tracking the income of individuals.

Notification Process

Once potential non-filers are identified, the NMS automatically sends a non-compliance email to the taxpayer’s registered email address. The Income Tax Department also sends notifications via SMS and email every year to inform non-filers of their obligation to submit their returns.

Sample email from Non-filers Monitoring System

Sample Email for Non-filers

How to respond to NMS compliance email?

Here is a step by step guide on how to deal with non-filers monitoring system email

  1. Visit Income Tax Portal
    Login Income Tax Website.

    income-tax-website-home
  2. Navigate to Compliance
    Click on View and Submit Compliance.

    income-tax-view-and-submit-compliance
  3. You will see the Submit Compliance Form.
    Navigate to Filing of Income Tax Return.

    income-tax-website-file-return
  4. Navigate to Asssessment Year for which Return Not Received.
    You have two options to respond:
    A. ITR has been filed,
    B. ITR has not been filed.
  5. If you select option (A), you need to provide:
    1. Mode of filing the ITR,
    2. Date of filing the ITR,
    3. An acknowledgement Number.
  6. If ITR was e-Filed,
    details will be prefilled automatically.

    Income-tax-website-itr-has-been-filed
  7. If you select option (B), you need to provide one of the following reasons:​​
    1. Return under Preparation,
    2. Business has been Closed,
    3. No Taxable Income,
    4. Others.
  8. Navigate to Related Information Summary.
    It gives a detailed information summary.

    income-tax-website-related-information
  9. Choose a relevant option under Information Related To against each transaction mentioned
    Provide additional information if required.

    income-tax-website-related-information-2
  10. Following are the options available to a taxpayer under Information Relates To tab:
    1. Self-Investment/ expenditure is out of exempt income
    2. Self-Investment/ expenditure is out of accumulated savings
    ​3. Self-Investment/ expenditure is out of gifts/ loans from others
    ​4. Self-Investment/ expenditure is out of foreign income
    5. Self-Income from a transaction is exempt 
    ​6. Income from a transaction is below taxable limit 
    ​7. Self-Income from transaction relate to different AY 
    ​8. Self-Not Known
    ​9. Other PAN 
    ​10. Not Known 
    ​11. I need more information
  11. Upon submission you will see following screen.
    Download Response.pdf for your future reference.

    income-tax-website-nms-submission

Read More: Income Tax Refund: Eligibility, Procedure and Interest

Web Stories: Income Tax Refund: Eligibility, Procedure and Interest

Official Income Tax Return filing website: https://incometaxindia.gov.in/

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