What is Intimation u/s 143(1) and How to Deal With it ?
(Last Updated On: November 27, 2018)
Done with the filing and e-verification of ITR for F.Y. 17-18? Feeling Relaxed? Well, one more task is waiting for you i.e. processing of the ITR by IT department. Every year department sends you an intimation u/s 143(1) of income tax act which serves as a proof of processing your ITR. It is very important to check all the intimations or notices received by the department calmly and don’t fret.
But the real problem is that many of us are not aware of the essence of such notices/ intimations. And this unawareness gives birth to fear which ultimately leads to unnecessary stress. Hence, with the aim to relieve you of all the worries, today we’ll explain everything in detail about intimation u/s 143(1) and how to deal with it?
What is Intimation u/s 143(1)?
When you file income tax return under section 139(1) or in response to Notice under section 142(1), it is checked (or processed) at CPC, Bengaluru. This processing is fully automated and has no human intervention. Therefore an intimation under section 143(1) is the result of such automated processing.
Now, the next question which pops-up in one’s mind is:
Will I also receive Income Tax Intimation under section 143(1) and what it means?
Yes. If you have filed return u/s 139(1) or 142(1) then you will receive this intimation, and it generally means one of the 3 things as discussed below:
- Everything is great, and you can chillax! This means that all the information you have declared in your tax return has matched with the government’s database.
- Wow! You have earned some bucks i.e. income tax refund. It means that total income tax deposited by you or on your behalf (like TDS, advance tax) is more than your actual tax liability which makes you eligible for a refund.
Now, there may arise 2 situations relating to your refund. First, where you receive the exact amount of refund as claimed in ITR. Second, when the amount claimed is more than refund amount released by the department. The latter scenario calls for attention and can be contested further if desired.
- Attention! Attention! You need to pay more tax. Now, this is where you need to tread with caution because here the income tax department is informing that you need to pay more tax as currently it is short-paid.
However, after reading above; did you realized that no matter what the outcome of return processing is, you will always receive intimation of section 143(1). Therefore an email from the department under this section is not a problem except when a demand for more tax is raised.
Also, if you have replied to the letter by the way of filing revised return then again you will receive an intimation for such revised return.
How to know whether any Tax Demand is raised or not?
Whenever you receive the letter of intimation under section 143(1), there are 2 columns on the page as highlighted below:
- Provided by Taxpayer in Return of Income: Which means, tax computation done by you in the tax return.
- As Computed u/s 143(1): Which means, tax computation done by CPC as per the information in its database and applicable tax rules (like Form 26AS, 16, 16A etc).
So, match both the columns and pay attention at Column – Tax Payable (Sl.No. 24) !! If any balance amount visible there then it represents an additional demand of tax which you need to pay.
What type of Adjustments are made by CPC in section 143(1)?
CPC (Centralized Processing Centre) checks your income tax return on the basis of following criteria and makes adjustment accordingly.
- any arithmetical errors, like omission/ accidental mistakes in the return,
- an incorrect claim made even if it is legally wrong or doesn’t match with the information in return,
- if ITR for the previous year/years is filed after the due date as per 139(1) then the losses of such years are disallowed to be set-off from current year income,
- any expenditure which has been disallowed as per the audit report but not considered while preparing the return,
- disallowance of deductions taken u/s 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or 80-IE, only if the return is filed after due date u/s 139(1),
- addition of income appearing in Form 26AS or 16A or 16 which has not been included while computing the total income in the return. Provided also that no such adjustment shall be made in relation to a return furnished for the A.Y 18-19.
How does Letter of Intimation u/s 143(1) look like?
Shown below is an actual intimation letter u/s 143(1). Here, the first part represents the basic information about the taxpayer/ assessee.
Next part shows the detailed bifurcation of an assessee’s income like heads of income, deductions under chapter VI-A, tax relief, tax liability etc. All these details are given as per taxpayer and department in the form of comparison.
What is the time limit for issue of Intimation letter?
Intimation under this section has to be sent to the taxpayer/ assessee within 1 year from the end of FY (financial year) in which return is filed.
For e.g. for return belonging to FY 17-18 (AY 18-19) which is filed in July 2018; the intimation u/s 143(1) has to be sent by 31st March 2020 (i.e. 1 year from 31st March 2019).
What you should do when such Intimation is received?
Technically, if an additional tax demand is raised by the department then you should file a response within 30 days from the date of issuance of such intimation.
If any failure in filing the response arises your return shall be processed with the adjustments made by the department. Further, provisions of penalty on short-payment of tax etc may be levied on you.
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Happy Filing 🙂