Income Tax Advisory on Income Discrepancies has recently been issued by the Income Tax Department (ITD) to selected taxpayers, creating concern and confusion among many. The department has clarified that these communications are advisory in nature, not enforcement notices. Their purpose is to make taxpayers aware of mismatches between income reported in their Income Tax Returns (ITR) and transaction data available with the department through reporting entities.
What Is the Income Tax Advisory on Income Discrepancies?
The Income Tax Advisory on Income Discrepancies is an informational message sent via SMS or email to certain taxpayers. According to the ITD, these advisories are issued only in specific cases where a significant gap is observed between income disclosed in the ITR and data reported by banks, financial institutions, employers, mutual funds, or other reporting entities.
The department has emphasized that this communication is meant to facilitate voluntary compliance and give taxpayers an opportunity to review and correct their records before any formal action is initiated.
Why Did You Receive This Income Tax Advisory on Income Discrepancies?
The Income Tax Department has stated that the recent communications were sent only in selective cases where discrepancies were observed between the income reported in the Income Tax Return (ITR) and information available with the department.
This information is received from reporting entities such as banks, mutual funds, employers, registrars, and other financial institutions. When there is a significant gap between the taxpayer’s disclosures and third-party data, an advisory is issued.
The department emphasised that these communications are not notices, summons, or penalties, but an opportunity for taxpayers to review their records and correct errors voluntarily.
What Does the Income Tax Department Expect You to Do?
The ITD has advised taxpayers to take the following steps after receiving an Income Tax Advisory on Income Discrepancies:
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Review AIS and TIS
Log in to the income tax portal and carefully check your Annual Information Statement (AIS) and Taxpayer Information Summary (TIS). -
Provide Feedback on AIS
If any transaction is incorrect or does not belong to you, submit feedback directly on the portal with supporting details. -
Revise or File Belated Return
If a genuine omission or error is found, revise your return or file a belated return, as applicable. -
Act Before the Deadline
For Assessment Year (AY) 2025–26, the last date to file a belated or revised return is 31 December 2025.
Is This a Notice or Penalty?
No. The Income Tax Advisory on Income Discrepancies is not a notice, summons, or penalty order. The department has clearly stated that the communication does not command enforcement. However, ignoring it may increase the risk of scrutiny later.
Responding promptly demonstrates good faith and helps avoid future complications such as reassessment or penalty proceedings.
Link with the NUDGE Initiative
This advisory is part of the ITD’s NUDGE initiative (Non-Intrusive Usage of Data to Guide and Enable). The program focuses on helping taxpayers voluntarily correct mistakes, especially in sensitive areas like foreign assets and foreign income reporting.
Under the Income-tax Act, 1961 and the Black Money (Undisclosed Foreign Income and Assets) Act, accurate disclosure of foreign assets is mandatory. Non-compliance can attract severe penalties, making timely correction critical.
Who Should Be Extra Careful?
Taxpayers who should pay special attention to an Income Tax Advisory on Income Discrepancies include:
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Salaried individuals with multiple income sources
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Investors with capital gains or high-value transactions
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NRIs and residents with foreign assets or income
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Freelancers and professionals with Form 26AS/AIS mismatches
The Income Tax Advisory on Income Discrepancies is a taxpayer-friendly alert, not a threat. It provides a valuable opportunity to reconcile income data, correct mistakes, and remain compliant without facing enforcement action. Taxpayers are strongly advised to review their AIS, respond through the compliance portal, and complete revisions well before 31 December 2025.
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