US to India · Tax notices and disputes
Tax Notices and Disputes in India: What US Companies Should Do
Prepared by S U and Company's CA-led advisory team · Published 26 October 2026 · About S U and Company
Receiving a notice from the Income Tax Department or the GST authorities is not itself a sign that something has gone wrong — a large share of notices are routine mismatches or scrutiny selections. What actually determines the outcome is how the first 72 hours are handled: whether the deadline is correctly noted, whether the right records are pulled together quickly, and whether the response goes in through the right channel before the window closes.
Quick answer
What should a US-owned Indian subsidiary do when it receives a tax notice?
Do not ignore it, and do not reply without reviewing it first. Note the response deadline, send the notice to your tax adviser the same day, collect the supporting records, and respond through the correct portal on time. Appeals run through the first appellate authority for most orders, the Dispute Resolution Panel for transfer pricing adjustments, and the tribunal beyond that, with treaty routes available where double taxation is involved.
1. The first 72 hours matter most
- Read the notice fully. Note the legal section it is issued under, the tax year or period it covers, and the exact response deadline.
- Forward it to your adviser the same day — notices are time-bound and some response windows are genuinely short.
- Collect the supporting records: books, invoices, agreements, bank statements and prior filings relevant to the period in question.
- Confirm the notice actually reached the right entity, and that the registered email address and portal logins are working and being monitored.
- If the data cannot realistically be assembled by the deadline, apply for more time in writing before the deadline expires, not after.
2. The common notice types, and what each usually means
| Notice type | What it usually means |
|---|---|
| Intimation or mismatch | A difference between the return filed and the tax department's own data, such as withholding tax credits |
| Scrutiny assessment | The return has been selected for a more detailed examination |
| Transfer pricing reference | A Transfer Pricing Officer will review the intercompany pricing specifically |
| Withholding tax default | Short or late deduction or deposit of tax on a payment |
| GST notice | A mismatch or query on returns, input tax credit, or an export-of-services claim |
| Penalty or prosecution notice | A separate, more serious proceeding that needs immediate legal review |
3. Appeal and dispute-resolution routes
- Response and assessment. The first answer is the written reply and the supporting records submitted on time.
- Commissioner (Appeals). The first appeal against most assessment orders, within the time stated in the relevant Act.
- Dispute Resolution Panel. Available to eligible foreign companies and for transfer pricing adjustments specifically, as an alternative to the standard first appeal.
- Income Tax Appellate Tribunal. The main fact-finding appeal body above the first appellate authority.
- High Court and Supreme Court. Appeals confined to questions of law, not fresh findings of fact.
- Mutual Agreement Procedure. A government-to-government route for resolving treaty double taxation.
- Advance Pricing Agreement. Avoids future transfer pricing disputes for the transactions it covers, agreed in advance rather than litigated after the fact.
The exact time limit and the right route both depend on the specific order, which Act applies to that tax year, and the amounts involved. Have the order itself reviewed before choosing a route rather than assuming the previous year's process still applies.
4. Reducing the chance of a notice in the first place
- Reconcile books against the tax portal every quarter, particularly withholding tax credits and GST input credit.
- Keep transfer pricing documentation current rather than reconstructing it after a reference arrives — see our transfer pricing guide.
- Keep treaty documents on file in advance — see our treaty benefits documentation guide.
- File on time and keep a clean record of every response sent to the authorities.
5. What this means for a US parent
- US management does not need to act on every notice individually, but should be told about any transfer pricing adjustment, any permanent establishment question, or any demand above an agreed threshold.
- Set a clear reporting line so that a notice reaches the right person within a day of being received, rather than sitting in a general inbox.
6. Mistakes worth avoiding
- Ignoring a notice because the amount involved looks small.
- Replying before actually checking the books against what the notice alleges.
- Missing the appeal time limit because nobody was tracking it.
- Not keeping the registered email address and mobile number current on the tax and GST portals.
Frequently asked questions
What should be done first on receiving an Indian tax notice?
Read the notice fully, note the response deadline, and forward it to your tax adviser the same day. Notices are time-bound and some response windows are short, so the first 24 hours matter more than they might appear to at first glance.
Can a transfer pricing adjustment order be appealed?
Yes, through either the Dispute Resolution Panel route against the draft assessment order or the standard first appeal against the final order, followed in either case by the Income Tax Appellate Tribunal if the dispute continues.
What is the Mutual Agreement Procedure?
A government-to-government treaty process in which the Indian and US tax authorities negotiate to resolve a double-taxation case arising under the India-US treaty, used when a dispute has cross-border tax consequences on both sides.
Is a GST notice handled differently from an income tax notice?
Yes. GST runs on its own portal, its own forms and its own appeal path, separate from the income tax system, so a GST notice needs its own response process rather than being folded into an income tax reply.
Do tax notices go to the US parent directly?
No. Tax notices are issued to the Indian company itself, not to the US parent, though the parent should still be kept informed of anything with real financial or reputational significance.
What are the DRP and the ITAT?
The Dispute Resolution Panel hears objections to a draft assessment order and is available to eligible foreign companies and in transfer pricing cases specifically. The Income Tax Appellate Tribunal is the main appellate forum on both facts and law, with further appeals possible to the High Court.
What is the deadline to appeal an Indian income tax order?
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 generally due within 30 days of receiving it, and an appeal to the Income Tax Appellate Tribunal is generally due within 60 days. The exact time limit depends on the order and the applicable Act, so it should be confirmed against the specific notice rather than assumed.
How S U and Company can help
We handle notices, assessments and appeals for US-owned Indian subsidiaries — from the first written reply through to the tribunal — and coordinate with litigation counsel where a dispute needs it. See our related guides on transfer pricing and contracts and arbitration, or explore the US-to-India entry guides.
Sources and further reading
- Income Tax Department — e-filing portal, notices and appeal procedures.
- Income Tax Appellate Tribunal — appeal procedures and rules.
- GST portal — GST notices and returns.