A daily-wage laborer from Uttar Pradesh has found himself at the center of a puzzling income tax case after receiving a notice demanding ₹7.15 crore in unpaid taxes. Govind Kumar from Rudamau village in Hardoi district received the shocking communication on January 13, leaving him and his family bewildered about how such a massive tax liability could be attributed to someone earning through manual labor. Kumar lives with his wife Soni Devi and elderly parents in a thatched hut, making ends meet through daily wage work.

According to reports, IT inspector Shubham Sharma stated he had no information about any team visiting the village to serve such a notice, adding another layer of confusion to the case. The incident highlights potential issues in the tax assessment system and underscores the importance of understanding income tax notices and proper response procedures.

Understanding Income Tax Notices

An Income Tax Notice is a formal communication from the Income Tax Department sent to taxpayers on various grounds. Receiving such a notice does not automatically indicate wrongdoing, as these communications can signal issues with filing procedures, unreported income, data mismatches, or requests for clarification and supporting documents. The notices require prompt attention to avoid penalties and ensure compliance with tax regulations.

Income tax notices commonly arise from discrepancies between Form 26AS data and filed ITR, missing information in tax returns, mathematical errors in calculations, or when the department seeks additional documentation to verify claims made in returns.

Types of Income Tax Notices and Response Guidelines

The Income Tax Department issues various types of notices, each serving specific purposes and requiring different response approaches:

Section 139(9) Notice

This represents one of the most common types of income tax notices, issued when an ITR is deemed defective due to missing details such as balance sheet information, incorrect tax payment details, or mismatches in income figures. Taxpayers can rectify the information within the specified time period to resolve the issue.

Section 142(1) and 143(1) Notices

Section 142(1) notices are sent when the IT Department seeks additional information or documents and require careful response with proper documentation. Section 143(1) notices serve as intimations about mathematical errors, income mismatches, or tax refund calculations, allowing taxpayers to either agree with adjustments or file rectification requests.

Serious Assessment Notices

Section 143(2) notices indicate ITR scrutiny but do not immediately imply wrongdoing, requiring taxpayers to substantiate claims with supporting documents. Section 148 notices relate to income the department believes has not been assessed, requiring taxpayers to file returns explaining why earlier reports were correct or why reassessment is unnecessary.

Key Response Principles

Timely response to income tax notices is crucial for avoiding penalties and maintaining compliance. Taxpayers should carefully review notice details, gather relevant supporting documents, and respond within specified timeframes. Understanding the specific type of notice received helps determine the appropriate response strategy and required documentation.

The UP laborer's case serves as a reminder that taxpayers should verify notice authenticity and seek professional guidance when facing complex tax situations, particularly when demands appear disproportionate to actual income levels.

India's direct tax collection demonstrated strong momentum in the current fiscal year, with net collections growing 8.8% to ₹18.38 lakh crore till January 11. The growth was primarily driven by robust corporate tax performance and a significant slowdown in refund disbursements, according to data released by the Income Tax Department.

Corporate Tax Performance Leads Growth

Corporate tax collection emerged as the key growth driver, with net collections surging 12.4% to ₹8.63 lakh crore during the period. This strong performance reflects improved business profitability and better tax compliance across corporate India.

Taxes from non-corporates, including individuals and Hindu Undivided Families (HUFs), recorded a more modest growth of 6.39% to ₹9.30 lakh crore.

Gross Collections and Refund Trends

Gross direct tax collection increased 4.14% to ₹21.50 lakh crore till January 11. The gross collections comprised corporate tax of ₹10.47 lakh crore and non-corporate tax of ₹10.58 lakh crore.

A significant factor contributing to higher net collections was the sharp decline in tax refund issuance, which nose-dived 17% to ₹3.12 lakh crore during the period. This slower refund disbursement effectively boosted the net tax kitty.

Securities Transaction Tax Remains Flat

Securities Transaction Tax (STT) collection stood at ₹44,867.00 crore between April 1 and January 11, recording flat growth compared to the same period last year. This reflects subdued capital market activity during the review period.

Expert Analysis and Government Targets

Rohinton Sidhwa, Partner at Deloitte India, described the 9% net collection growth as encouraging, suggesting the government may be on track to achieve its year-end target. However, he noted that the growth is significantly attributed to lower refunds being released to both corporate and individual taxpayers.

Sidhwa highlighted: "Exact details of why the trends on refunds diverging significantly from the previous year are not very apparent."

For the current fiscal (2025-26), the government has projected direct tax collection at ₹25.20 lakh crore, representing a 12.7% year-on-year increase. Additionally, the government aims to collect ₹78,000.00 crore from STT in FY26.