NRI Tax Notice After Filing ITR: Reasons and What to Do
One of our clients, an IT professional based in Abu Dhabi, filed his ITR for FY 2024-25 in August 2025.
Two months later, he received an email from the Income Tax Department. He panicked, assumed the worst, and called us.
It turned out to be a Section 143(1) intimation. A minor mismatch between the TDS he had claimed and what appeared in his Form 26AS. A small correction, resolved in under 10 minutes on the portal.
The notice looked scary. The issue was not.
Most NRI tax notices are like this. Triggered by gaps that are easy to explain or correct. Most NRIs do not know which type of notice they have received. They do not know what it means, or what to do next.
This guide covers exactly that.
Why the Income Tax Department Sends Notices to NRIs
The department's systems are largely automated now.
When you file an ITR, the return is matched against data the department already holds. This includes Form 26AS, the AIS, the TIS, and data from international agreements like FATCA and CRS.
Any mismatch or gap triggers an automated flag. That flag generates a notice.
NRIs receive notices for several reasons. Mismatches in reported income, high-value transactions, non-filing, AIS or 26AS discrepancies, and unreported foreign assets are the most common.
The most common specific triggers for NRIs:
TDS mismatch.
You claimed TDS in your ITR that does not match what appears in Form 26AS. TDS mismatch is one of the most common triggers. If what you claimed does not match Form 26AS, the system flags it.
High-value transactions without a return.
Buying property, investing in stocks, or transferring large sums to India creates a paper trail. Without a filed ITR, the department will question the source of funds.
Wrong ITR form.
One of the most frequent mistakes is selecting the incorrect ITR form. Most NRIs should file ITR-2. Filing ITR-1 when you have capital gains triggers a defective return notice.
DTAA claims without supporting documents.
Without Form 10F and a Tax Residency Certificate, the department cannot verify your treaty claim.
CRS or FATCA data.
India receives information on foreign accounts through CRS and FATCA. Any undisclosed foreign income or asset mismatch with the ITR can trigger a notice.
Incorrect residential status.
Claiming NRI exemptions without qualifying as an NRI for that year will get the return flagged.
👉 Before filing, always cross-check your income details against your Form 26AS and AIS. Our guide on how to read your Annual Information Statement explains where to find discrepancies before they find you.
The Five Types of Notices NRIs Typically Receive
Each notice refers to a specific section of the Income Tax Act. The section tells you exactly what the department wants.
Section 143(1): Intimation After Processing
This is the most common notice NRIs receive. It is not a scrutiny notice. It is an automated communication sent after the department processes your return.
An intimation notice is sent after you have filed your income tax return - after your return has been processed and accepted.
It may inform you that your return was accepted as filed, a refund is being processed, or there is a demand because the department's calculation differs from yours.
If it shows a demand, compare the department's computation against your ITR. If the difference is due to a data entry error on your side, file a revised return. If you believe the department made an error, file a rectification request under Section 154.
Response time: Typically 30 days from the date of the intimation.
Section 139(9): Defective Return Notice
A defective return notice under Section 139(9) highlights missing information, incorrect data entry, or incomplete schedules. Once issued, the taxpayer receives 15 days to rectify the defect.
Common reasons for NRIs:
Wrong ITR form used
Schedules left blank (capital gains schedule or foreign assets schedule)
Inconsistency between income declared and TDS claimed
If you do not correct the defect, the return is treated as invalid. Penalties, interest, and reclassification of income can follow.
Log in to incometax.gov.in, go to "Pending Actions," and respond within 15 days. Correct the specific defect mentioned. Do not file a fresh return unless asked.
Section 142(1): Pre-Assessment Information Request
This notice asks you to submit documents or information before the assessment is completed.
A notice under Section 142 is issued when the assessing officer needs additional documentation or information from you to complete the assessment process.
For NRIs, this typically asks for passport copies confirming days spent in India, bank statements for NRE/NRO accounts, details of property transactions, or source of funds for large investments.
Reply promptly with clarity. Provide passport details, overseas employment records, and supporting bank documentation. Many NRIs ignore 133(6) notices thinking they are harmless - but ignoring them often escalates the case to 143(2) scrutiny.
Response time: The notice specifies the deadline. Typically 15 to 30 days.
Section 143(2): Scrutiny Notice
This notice is issued when the department needs deeper scrutiny to verify the information in your return.
Section 143(2) means the department has selected the return for scrutiny to verify correctness of income, loss, or tax. This is the gateway to a detailed assessment.
The department will ask you to substantiate income, deductions, capital gains computations, TDS credits, and DTAA claims.
Treat this as a structured audit. Submit evidence for each issue: capital gains, rent, interest, TDS, DTAA claims, foreign tax credit, and source trails.
A Section 143(2) notice has a strict timeline. A notice under Section 143(2) must be issued within 3 months from the end of the financial year in which the return is furnished. Beyond that, the notice is invalid.
For NRIs, do not handle this alone. Engage a tax professional with experience in NRI assessments before responding.
Section 148: Reassessment Notice
This is the most serious notice type.
This is a reassessment notice. It is issued when the Assessing Officer has reason to believe that some income chargeable to tax has escaped assessment.
Normal reassessment windows allow notices for up to three years from the end of the relevant assessment year. For serious cases involving income exceeding Rs 50 lakh or undisclosed foreign assets, the window extends up to ten years.
For NRIs, this is often triggered by information received under FATCA or CRS about undisclosed foreign income, property transactions that were not reported, or significant deposits to NRO accounts with no corresponding ITR.
File a fresh return in response within the stipulated time, generally 30 days.
Do not ignore a Section 148 notice. The consequences escalate quickly.
👉 If you receive a Section 148 notice, consult a CA with NRI tax experience before filing any response. This is not a notice to handle independently.
What to Do When You Receive Any Tax Notice: Step by Step
Step 1: Do not panic. Most notices are for minor discrepancies that can be resolved with proper documentation and explanation.
Step 2: Log in to incometax.gov.in. Download the notice. Check the section number and the deadline for response. Every notice is accessible under "Pending Actions" on the portal.
Step 3: Match the notice against your ITR, Form 26AS, and AIS. Identify the specific discrepancy the department is flagging.
Step 4: Gather documents relevant to the issue. This may include bank statements, Form 16A, property sale deed, capital gains computation, DTAA claim documents, or passport copies.
Step 5: Respond on the portal within the stated deadline. You can respond through the online Income Tax portal using your login credentials. Verification and response can also be done using Aadhaar OTP, net banking, or DSC.
Step 6: Keep a copy of your response and any acknowledgment number generated by the portal.
What Happens If You Ignore a Tax Notice?
Ignoring a notice can lead to penalties, interest, reassessment, or even prosecution in serious cases.
Section 144 applies when you do not file, do not furnish details, or do not respond when required. The Assessing Officer then completes the assessment on available material. This leads to high demands and penalties.
The department does not follow up with reminders. If you miss a deadline, the process moves forward without your input.
The most common failure for NRIs living abroad is simply not seeing the notice. The department sends notices to the email address registered on the income tax portal, not to your overseas address.
Confirm that your email address and mobile number on incometax.gov.in are current and monitored regularly.
Notice Type at a Glance
(Sources: GoINRI, Taxscan, 1Finance, TaxBuddy)
Situations Specific to NRIs
Continuing a Resident Savings Account After Becoming an NRI
NRIs should convert existing resident savings accounts into NRO/NRE accounts. Keeping a resident savings account as an NRI violates FEMA and often comes under the tax department's radar during data checks.
If you still hold a resident savings account after becoming an NRI, update it to an NRO account immediately. The bank can assist with this conversion.
Incorrect Residential Status on the ITR
NRI status under the Income Tax Act depends on days spent in India during the financial year. Filing as a resident when you qualify as an NRI has serious consequences. All your global income becomes taxable in India.
This is one of the more complex corrections to make after filing. A revised return may be needed.
Read our guide on NRI vs resident tax filing: key differences for how status is determined.
DTAA Claims Without Form 10F or TRC
Many NRIs claim DTAA benefits in their ITR without attaching a Tax Residency Certificate or Form 10F. The department flags this routinely.
If you plan to claim DTAA relief, ensure both documents are filed alongside your return. Our article on how to avoid double taxation as an NRI covers the process.
Property Transactions Without a Filed ITR
If you sold property and the buyer deducted TDS, a paper trail already exists in the department's system. No filed ITR means a notice will follow.
The buyer's TDS filing creates a record under your PAN. When the department sees TDS deducted on a property transaction but no corresponding ITR, an automated flag is generated.
👉 Our guide on common NRI tax filing mistakes covers property-related errors in more detail.
How to Avoid Getting a Notice in the First Place
The most effective response to a tax notice is to not receive one.
File on time.
Late filings attract interest under Sections 234A, 234B, and 234C. Penalties under Section 234F range from Rs 1,000 to Rs 5,000 depending on income.
Use the right ITR form.
Most NRIs need ITR-2. If you have business income, use ITR-3. Never use ITR-1 if you have capital gains or foreign assets.
Cross-check Form 26AS and AIS before filing.
Mismatch between the TDS claimed in your return and what appears in Form 26AS is a common reason for tax notices. Reviewing AIS and TIS ensures accuracy and saves future trouble.
Report all India-sourced income.
Rental income, NRO interest, capital gains, dividends. Do not assume TDS already deducted means nothing needs to be reported.
Disclose foreign assets correctly.
Schedule FA in the ITR must be filled if you hold foreign accounts, property, or investments. NRIs are exempt from this schedule only if they hold assets as an NRI, not after returning to India.
File even if income is below the taxable limit.
TDS on NRO interest or a property sale creates a record. Non-filing while that TDS exists triggers notices.
For more on filing correctly, visit our step-by-step guide on how NRIs can file income tax in India.
Can You File a Revised Return After Receiving a Notice?
Yes, in most cases.
After receiving a notice, you can file a revised return under Section 139(5) if you discover an error. The deadline for AY 2025-26 is 31 December 2025.
A revised return replaces the original. Filing it can sometimes resolve the discrepancy before a formal response is required.
If the assessment has already begun under Section 143(2), a revised return may not be accepted. Respond to the notice directly with corrected information and supporting documents.
When to Seek Professional Help
Minor issues like a 143(1) mismatch or a 139(9) defect are usually manageable independently.
For the following, engage a tax professional:
Any Section 143(2) scrutiny notice
Any Section 148 reassessment notice
Notices involving DTAA claims, foreign assets, or CRS/FATCA-sourced information
Situations where you have not filed for multiple years and the department has initiated proceedings
At Belong, we offer a dedicated NRI tax filing service. This includes handling notices and assessments as part of complex filing packages.
Our pricing:
Simple returns: from Rs 2,500
Standard returns: from Rs 4,500
Complex returns with property sales, DTAA, or notices: from Rs 7,500
For all NRI tax topics in one place, visit our NRI taxation resource centre.
While You Are Here: Is Your India Portfolio Working Efficiently?
Many NRIs who receive notices are also holding funds in NRO fixed deposits. TDS is deducted at 30% and the money is not optimally deployed.
At Belong, we help NRIs move towards GIFT City structures where returns are tax-free and fully repatriable. No TDS. No refund wait.
Explore:
GIFT City mutual funds for tax-efficient USD-denominated returns
DSP Global Equity Fund for global diversification
Tata India Dynamic Equity Fund for India exposure with tax efficiency
Edelweiss Greater China Equity Fund for emerging market access
Sundaram India Mid Cap Fund for mid-cap India growth
NRI FD rates tool to compare current rates
GIFT Nifty tracker to monitor India market signals
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Frequently Asked Questions
Is a Section 143(1) notice serious?
Usually not. It is an automated intimation sent after the department processes your return. It may confirm your return was accepted, or flag a minor mismatch. Review it carefully, compare it against your ITR, and respond if a demand is raised.
How long does the Income Tax Department have to issue a scrutiny notice?
A Section 143(2) notice must come within 3 months of the year-end in which the return was filed. Beyond that, the notice is invalid.
Can NRIs respond to notices from abroad?
Yes. All notices and responses are handled entirely online through incometax.gov.in. No physical presence in India is required.
What if I receive a notice for a year I did not file an ITR?
This typically falls under Section 148 or the non-filing campaign. You will need to file the relevant year's ITR in response and explain the income position for that year. Seek professional help for this.
How do I know if I have received a tax notice?
Log in to incometax.gov.in and go to "Pending Actions" followed by "e-Proceedings." All active notices appear there. Keep your registered email updated, as the department sends notices electronically.
Can I handle a 143(2) scrutiny notice on my own?
Notices like 142(1) and 133(6) may seem simple but mishandling them can escalate the case. For 148 or 143(2), professional help is advised. For NRIs with cross-border income, DTAA claims, or property transactions, always involve a qualified tax advisor.
Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice. Tax regulations change frequently. Please consult a qualified tax professional for advice specific to your situation.
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