Do you get income tax refunds? Save your deduction evidence or face a 200% penalty

Taxpayers are receiving automated online notifications from the Income Tax Department if extra deductions are claimed in the Income Tax Return (ITR), resulting in an income tax refund from the tax deducted at source (TDS) by employers. Such notifications are issued automatically if there are disparities between the values specified in Form 16 and the figures registered in ITR, resulting in a tax refund.

Following the issuing of the auto-generated notification, recipients will have 15 days to update their returns to correct any differences with Form 16 or face a 200 percent penalty if deductions are claimed fraudulently.

“Many taxpayers received such intimations last year as well,” CA Karan Batra, Founder, and CEO of, said, adding, “It is not a tax notice, but a mild reconfirmation.”

In the event of a genuine claim, you must keep proofs of investments (such as subscriptions/investments in NPS, PPF, SSY, NSC, SCSS, tax-saving FD, ULIP, ELSS, etc.) and/or expenses (such as payment of life/health insurance premiums, receipts for children’s tuition fees, home loan interest and repayment of home loan principal, etc.) and/or proof of donations given, etc.

This is due to the possibility of receiving a legitimate Income Tax Notice following manual verification of the auto-generated intimation if the ITR is not updated within the 15-day timeframe.

“Although the chances are slim, it might happen,” Batra remarked.

In this instance, you may have to upload the investment evidence in the spaces given on the e-filing page to avoid paying a 200 percent penalty.

So, if you have made tax-saving investments, deductible expenses, or donated money to organizations eligible for tax deductions under Section 80G of the Income Tax Act but have not disclosed these to your employer for TDS benefits, keep proof of such tax-saving investments, expenses, or donations handy to avoid any inconvenience.

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