If your Indian subsidiary receives a tax notice, do not ignore it and do not reply without reviewing it. Note the deadline, send it to your adviser the same day, collect the supporting records and respond on the portal on time. Appeals go through the first appellate authority, the Dispute Resolution Panel for transfer pricing and the tribunal, with treaty routes available for double taxation.
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Key facts
| First step | Read the notice, note the section, the tax year and the response date |
|---|---|
| Where notices arrive | Income tax e-filing portal, GST portal, email and registered post |
| First appeal | Commissioner (Appeals) for most income tax orders, generally within 30 days of the order |
| Transfer pricing | Objections to the Dispute Resolution Panel within 30 days of receiving the draft assessment order, then the Income Tax Appellate Tribunal (appeal generally within 60 days) |
| Double tax | Mutual Agreement Procedure under the India-US treaty |
| Advance certainty | Advance Pricing Agreement for future years |
The first 72 hours
- Read the notice fully. Note the legal section, the tax year or period and the response deadline.
- Forward it to your adviser the same day. Notices are time-bound and some deadlines are short.
- Collect the supporting records: books, invoices, agreements, bank statements and prior filings.
- Confirm that the notice reached the right entity and that the registered email and portal logins are working.
- Apply for more time if the data cannot be assembled by the deadline, in writing and before it expires.
Common notices
| Notice type | What it usually means |
|---|---|
| Intimation or mismatch | A difference between the return and tax data, such as Withholding Tax credits |
| Scrutiny assessment | The return has been selected for detailed examination |
| Transfer pricing reference | A Transfer Pricing Officer will review the intercompany pricing |
| Withholding Tax default | Short or late deduction or deposit on a payment |
| GST notice | A mismatch or query on returns, input credit or an export of services claim |
| Penalty or prosecution notice | A separate proceeding; needs immediate legal review |
Appeal and dispute routes
- Response and assessment: the first answer is the written reply and supporting records.
- Commissioner (Appeals): the first appeal against most assessment orders, within the time stated in the law.
- Dispute Resolution Panel: for eligible foreign companies and for transfer pricing adjustments, an alternative to the first appeal.
- Income Tax Appellate Tribunal: the main fact-finding appeal body.
- High Court and Supreme Court: appeals on questions of law.
- Mutual Agreement Procedure: government-to-government route for treaty double taxation.
- Advance Pricing Agreement: avoids future transfer pricing disputes for covered transactions.
Time limits and the exact route depend on the order, the Act that applies to the tax year and the amounts involved. Always have the order reviewed before choosing a route.
Reducing the chance of a notice
- Match books to the tax portal each quarter, especially Withholding Tax credits and GST.
- Keep transfer pricing documentation current. See transfer pricing.
- Keep treaty documents on file. See treaty and PE risk.
- File on time and keep a clean record of responses.
What this means for a US parent
- Your US management does not need to act on every notice, but they should be told about any transfer pricing adjustment, a permanent establishment question or a demand above an agreed amount.
- Set a reporting line so that notices reach the right person within a day.
Mistakes to avoid
- Ignoring a notice because the amount looks small.
- Replying without checking the books.
- Missing the appeal time limit.
- Not updating the registered email and mobile number on the portals.
See also: Treaty disputes: India-US tax treaty (DTAA) explained, including the mutual agreement procedure.
How AU Corporate handles this
We handle notices, assessments and appeals, from first reply to the tribunal, and coordinate with counsel where needed.
Related services: Taxation and regulatory services
Official sources
Rules on this page can be verified at the primary sources: Ministry of Corporate Affairs, Reserve Bank of India, Income Tax Department and the GST portal.
Frequently asked questions
What should be done first on getting a tax notice?
On getting a tax notice, the deadline should be noted, the notice sent to the tax adviser the same day and the supporting records collected.
Can a transfer pricing order be appealed?
A transfer pricing order can be appealed through the Dispute Resolution Panel route or the first appeal, followed by the tribunal.
What is the Mutual Agreement Procedure?
A treaty process in which the Indian and US tax authorities resolve a double taxation case.
Is a GST notice handled differently?
A GST notice is handled differently from an income tax notice, because GST has its own portal, forms and appeal path.
Do notices come to the US parent?
Tax notices are issued to the Indian company, not to the US parent. The parent should be kept informed of anything significant.
What are the DRP and the ITAT?
The Dispute Resolution Panel (DRP) hears objections to a draft assessment order and is available to foreign companies and transfer pricing cases. The Income Tax Appellate Tribunal (ITAT) is the main appellate forum on facts and law, with further appeals to the High Court.
What is the notice period in India?
The notice period in India is set by the employment contract, commonly one to three months for professional roles. State and statutory rules also apply, so it should be written clearly into each contract.
Can EOR employees move into the subsidiary later?
EOR employees can move into the subsidiary later with planning. Employees must agree to the transfer, their service history and benefits such as gratuity and provident fund should carry over, and contracts and notice periods need to be handled, with timing planned so that there is no gap in employment.
What is the deadline to appeal an income tax order in India?
An appeal to the Commissioner (Appeals) is generally due within 30 days of the order, objections to the Dispute Resolution Panel against a transfer pricing draft assessment order are due within 30 days of receiving it, and an appeal to the Income Tax Appellate Tribunal is generally due within 60 days.
Related guides
Transfer Pricing in India: A Guide for US Parents and Their Indian Subsidiaries
How transfer pricing works for an Indian subsidiary of a US company: arm's length pricing, documentation, Form 48, methods, safe harbour and audits.
Read the guide →The India-US Tax Treaty and Permanent Establishment Risk for US Companies
How the India-US tax treaty applies to payments to your US parent: Withholding Tax rates, Tax Residency Certificate, Form 41 and permanent establishment risk.
Read the guide →Ten Mistakes US Companies Make When Setting Up in India, and How to Avoid Them
The ten most common and costly mistakes US companies make when setting up an Indian subsidiary, and how to avoid each. Includes a pre-filing checklist.
Read the guide →Contracts and Arbitration in India: A Guide for US Companies
Intercompany and customer contracts for an Indian subsidiary, governing law, arbitration clauses, the New York Convention and enforcing awards in India.
Read the guide →The India-US Tax Treaty (DTAA) Explained: Scope, Residency and Relief from Double Tax
How the India-US tax treaty works: who qualifies, which taxes it covers, how treaty and domestic law interact, residency, relief from double tax and disputes.
Read the guide →Sources
Last updated 14 October 2026. General information only, not legal or tax advice. Indian rules change often; confirm current requirements before acting.