Why Are Salaried Employees Getting Income Tax Notices in 2026? 11 Common Reasons & What to Do

The Income Tax Department’s current guidance covers AY 2026-27 under the existing Income-tax Act framework, while the Income-tax Act, 2025 applies to the new tax-year framework.

The exact tax year and section mentioned in a notice therefore matter, so always read the communication carefully.

A salaried person may have a straightforward salary income, but the department can see more than just salary.

Interest, investments, TDS, tax payments and other reported information can create a picture that is different from what was entered in the ITR.

The department also has online mechanisms for taxpayers to review mismatches and respond to notices or proceedings.

This is one of the first things to check. Sometimes the salary figure entered in the ITR is different from the figure appearing in Form 16 because of an entry mistake, an incorrect treatment of exempt components or confusion about the salary actually received during the year.

Even when the difference is accidental, it can create a mismatch during processing.

Before filing, compare the salary, taxable salary and TDS figures in the ITR with Form 16.

Form 26AS is important because tax credit claimed in the return is linked to the tax information reflected there.

The Income Tax Department has a specific Tax Credit Mismatch service for differences between TDS, TCS or tax paid reported in the ITR and the corresponding information in Form 26AS.

If there is a TDS mismatch, the taxpayer may need to contact the employer or other deductor so the underlying TDS statement can be corrected.

The Annual Information Statement gives taxpayers a wider view of information available with the Income Tax Department.

It can include TDS/TCS information, SFT information, tax payments, demand/refund information and other reported information.

If something appears in AIS and you do not recognise it, check the underlying transaction and use the available feedback or correction mechanism where appropriate.

A common mistake is to focus on salary and forget interest from savings accounts, fixed deposits or other deposits.

The amount may seem small, but if it is reported to the department and is missing from the ITR, the figures may not match.

Review bank statements and interest certificates along with AIS before filing.

Job changes can create confusion because there may be salary income and TDS information from more than one employer.

A taxpayer may accidentally omit one Form 16, duplicate a figure or fail to combine income correctly.

If you worked for two employers in the same financial year, reconcile both salary records before filing.

Salaried taxpayers often claim deductions and tax benefits for eligible expenses or investments.

A notice or adjustment can arise when a figure has been entered incorrectly, when the return does not match supporting documents, or when the deduction is not available in the way it was claimed.

Keep proof of investments, insurance, tuition fees, donations and other claimed deductions as applicable, and make sure the figures in the return agree with your records.

Salary is not always the only taxable income.

A salaried taxpayer may sell shares, mutual funds, property or other investments during the year.

If the related income or gain is missing or entered incorrectly, it can create a gap between the ITR and information available with the department.

Review broker statements, mutual-fund reports, property transactions and other investment records.

A return can be treated as defective when it contains incomplete or inconsistent information.

Examples can include claiming TDS without offering the related income to tax, reporting figures that do not reconcile with the return schedules, or leaving required information incomplete.

Do not ignore a defective-return communication. Rectify the issue within the period stated in the notice.

A communication under section 143(1)(a) can arise when the Centralized Processing Centre identifies a discrepancy during processing.

It is a proposed adjustment, so the taxpayer has an opportunity to agree or disagree before the return is processed.

Read the proposed adjustment carefully and respond within the deadline stated in the communication.

Salaried taxpayers can have more financial activity than they realise.

Tax payments, investment transactions, property transactions, refunds, demands or other information may be present in departmental records.

A notice can therefore appear even when the taxpayer has only one salary job.

Do not judge a notice only by the word “salary.” Look at the exact discrepancy and the assessment or tax year mentioned.

This is an important point for salaried employees. The New Tax Regime is the default regime.

During the financial year, an employee is expected to intimate the employer about the intended tax regime. If the employee does not make that intimation, the employer generally calculates TDS under the default New Tax Regime.

For a salaried taxpayer without business or professional income, the final regime choice can generally be exercised directly in the ITR each year, subject to the applicable filing rules.

So, an employer using the New Regime for TDS does not by itself mean that the taxpayer cannot choose the applicable regime while filing the ITR.

Check the ITR and tax computation carefully so the final tax position is correct.

The 30-day period often mentioned in tax discussions is primarily the deadline for e-verifying a filed ITR or submitting ITR-V.

It is not a general 30-day deadline for a salaried employee to choose the Old or New Tax Regime.

For non-business salaried taxpayers, the regime can generally be changed directly in the ITR, subject to the applicable filing rules.

Taxpayers with business or professional income have separate Form 10-IEA requirements.

Not necessarily. Different communications serve different purposes.

For example, a defective-return communication is used when a return is found to contain incomplete or inconsistent information, while a proposed adjustment communication points to a discrepancy identified during processing.

The practical lesson is simple: do not ignore the notice, but do not panic either. First understand what the department is asking and compare it with your records.

• Log in directly to the official Income Tax e-Filing portal instead of relying only on a link in an email or message.
• Open Pending Actions > e-Proceedings and view the relevant notice or communication.
• Check the assessment year or tax year, the section mentioned, the date of issue and the response deadline.
• Read the reason carefully. Identify the exact mismatch or information that has been questioned.
• Compare your ITR with Form 16, Form 26AS, AIS, bank records and investment records.
• Check whether the tax regime used for employer TDS matches the regime you intended to use while filing the ITR.
• Collect supporting documents before preparing a response.
• If the information is correct, respond according to the notice. If it is incorrect, identify what evidence supports your position.
• Submit the response within the stated time and keep a copy of the submission and supporting documents.

Suppose Neha is a salaried employee and her Form 16 shows salary of ₹9,00,000 with TDS of ₹70,000.

During the same year, she earns ₹35,000 of bank fixed-deposit interest but forgets to include it while preparing her ITR.

If that interest is available in the information reported to the department, the return may not match the department’s records.

Now suppose her employer calculated TDS using the New Tax Regime because she did not communicate a different intended regime during the year. That does not automatically settle her final regime choice for a non-business salaried return.

She should review the applicable rules and select the appropriate regime in the ITR while ensuring that the final tax calculation and TDS credit are correct.

In both situations, the useful question is not “Why did the department send me a notice when I am salaried?” The useful question is “What information does the department have, what did I report, and where is the difference?”

Taxpayers should pay attention to the tax year and the legal provisions cited in a communication.

The tax framework is in transition in 2026, so relying on an old article or remembered section number can create confusion.

If a notice is received, read the actual communication and the applicable assessment or tax year before deciding what action to take.

• Form 16 checked.
• Form 26AS checked.
• AIS reviewed.
• Bank interest reviewed.
• Multiple-employer income reconciled, if applicable.
• Capital gains and investment income reviewed.
• Deductions checked against supporting documents.
• Old vs New Tax Regime and employer TDS checked.
• ITR figures reconciled before filing.
• Pending e-Proceedings checked after filing.
• Notice deadline noted and response submitted on time.