Income Tax Department's Clarification Regarding Incorrect Tax Notices for Claims Under Section 80P

The Income Tax Department has elucidated a mistake made in sending notices to taxpayers about deductions under Section 80P of the Income Tax Act. This clarification follows a lot of confusion and worry on social media because taxpayers got these notices by mistake.

Many people gathered on X (Formerly Twitter), a social media platform, and shared that they got notices related to Section 143(1)(a)(ii) of the Income Tax Act, 1961. 

These notices were about deductions in Section 80P(2)(e) that they did not ask for. People were puzzled about why they got these notices in the first place.

The notices mistakenly said, "In Schedule 80, deduction under Section 80P(2)(e) cannot be claimed on income other than rental income". This added to the confusion because these notices were sent to businesses and LLPs that did not even apply for this specific deduction.

In response to the growing concerns, the Income Tax Department admitted the mistake and apologized for sending out these notices unintentionally. 

It is important to understand that Section 80P deductions are mainly related to cooperative societies and do not apply to firms or LLPs.

In an official statement, the department mentioned, "We have mistakenly sent out notifications under Section 143(1) of the Income-tax Act, 1961, with the following error description: 'In Schedule 80P, deduction under Section 80P(2)(e) cannot be claimed on income other than rental income.' We will send you an email about this issue soon.

In the past week, numerous taxpayers reached out to their tax advisors for guidance upon receiving these notices, even though they had electronically verified their returns before the August 31 deadline. 

These notices were related to deductions that were not applicable to individuals but had been mistakenly sent to cooperative societies.

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