Intimation Under Section 143(1) of Income Tax Act

Introduction

Intimation under Section 143(1) is a process where the Income Tax Department sends a communication to taxpayers after the processing of their Income Tax Return (ITR). This intimation is issued once the department verifies the information provided in the ITR. If there are any discrepancies, the taxpayer is informed about the changes or adjustments made. For Financial Year 2025-26, understanding this intimation is crucial for ensuring accurate tax filings and avoiding issues with the tax authorities. This guide will help explain what an intimation under Section 143(1) means, its importance, and how to respond to it.

What is an Intimation Under Section 143(1)?

Section 143(1) of the Income Tax Act involves the processing of income tax returns and the subsequent issuance of an intimation by the Income Tax Department. This intimation is essentially a confirmation or adjustment notice regarding the taxpayer's filed ITR. The department compares the details provided in the ITR with their own records, such as TDS statements, income statements, and bank details.

Key Points of Section 143(1):

1. Automated Process: The processing is done automatically by the department’s system.
2. No Detailed Scrutiny: This is not an audit but a verification of the data filed.
3. Rectification and Adjustments: If there is any error or mismatch, the department makes adjustments, such as adding or reducing taxes, and notifies the taxpayer.
4. Issuance of Intimation: Once the processing is complete, the taxpayer receives an intimation, which is not a demand notice but a statement of changes made.

The intimation under Section 143(1) ensures that there are no errors or mismatches in the tax return filed and that the taxes are calculated correctly.

When does one receive an Intimation on ITR?

An intimation under Section 143(1) is typically received after the Income Tax Department processes the filed ITR. The timing of receiving this intimation depends on when the return is filed.

Key Timing Details:

1. Filing Deadline: For FY 2025-26, the due date for filing ITR is usually 31st July for individuals (not requiring audit).
2. Processing Timeline: After filing the ITR, it generally takes about 1-3 months for the department to process the return.
3. Receipt of Intimation: The intimation is sent after the processing of the ITR, usually within 30 days to 6 months. The taxpayer receives it either through email or physical post.

Factors Affecting Timing:

• Timely Filing: Filing on time ensures quicker processing and intimation.
• Completeness of Return: If the ITR is incomplete or has discrepancies, the process may take longer.

Types of Income Tax Intimations

The Income Tax Department issues different types of intimations based on the status of the return and the processing outcome:

1. Section 143(1) Intimation: Issued after processing the ITR. It confirms tax calculation, refund, or demand.
2. Section 143(1)(a): Issued when preliminary adjustments (like TDS mismatches) are made.
3. Section 143(1)(b): Issued when no refund is due or when tax is payable.
4. Section 143(3): A detailed scrutiny notice is issued if the return is selected for detailed assessment.
5. Section 154 (Rectification Notice): Issued if there is a need for rectification of mistakes.

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How to Respond to Intimation U/S 143(1)?

Step 1: Download and Carefully Read the Intimation

• Log in to the Income Tax e-filing portal using your User ID (PAN) and password.
• Go to e-File → Income Tax Returns → View Filed Returns → Select the relevant Assessment Year → Download the Intimation Order (The password is usually your PAN in lowercase + Date of Birth in DDMMYYYY format).
• Compare the two columns: 'As provided by the taxpayer' and 'As computed by the department'. Identify the exact reason for the difference (e.g., mismatch in interest income, wrong deduction claim).

Step 2: Decide on Your Response

• If you agree with the Demand/Adjustment: If you realize you made a genuine mistake (like missing income), you should accept the demand.
• If you disagree with the Demand/Adjustment: If you believe the department made a mistake (e.g., they missed giving credit for a tax you paid), you need to challenge it.

Step 3: Submit Your Response Online (If there's a Demand/Dispute)

• Go to Pending Actions → Response to Outstanding Demand.
• Select the demand and click on Submit Response.
• If you agree: Select 'Demand is Correct'. You will be given the option to 'Pay Now' (if not paid already). After payment, update the challan details.
• If you Disagree: Select 'Disagree with Demand (in full or in part)' and choose the reason from the list (e.g., 'Demand paid, but not adjusted'). You will need to provide justification and upload supporting documents, like proof of tax payment.

Step 4: File a Rectification (If needed)

• If you find that your original return had a genuine mistake and you have paid the demand, sometimes you may need to apply to Section 154 (Rectification of Mistake) to correct your original return details.

Important Note: The time limit to respond to a demand in the intimation is usually 30 days. Respond on time to avoid further complications or interest.

Why is it Important to understand Section 143(1)?

Understanding Section 143(1) is important for the following reasons:

1. Ensures Tax Accuracy: It helps ensure that the tax calculated by the Income Tax Department is accurate and there are no errors.
2. Allows Rectification: If there is a mistake, you can file for rectification, ensuring your tax liability is correct.
3. Avoids Penalties: Early identification of discrepancies helps in avoiding penalties for late payments or incorrect filings.
4. Tracks Refunds: If you are due for a refund, the intimation confirms the status of your refund request.
5. Helps with Compliance: It ensures compliance with tax laws, reducing future issues with the tax authorities.

Common Scenarios in Intimation 143(1)

The Intimation Under Section 143(1) often points out specific types of differences between your filing and the department's records. Knowing these common scenarios helps you understand why you received the notice:

Common Scenario

Simple Explanation of the Problem

What the Intimation Shows

Missing Income (The Most Common)

You forgot to include interest income from a Fixed Deposit or Savings Account (which your bank reports to the tax department).

The income calculated by the department is higher than what you reported, leading to a Tax Demand.

TDS Mismatch

Your employer or bank deducted tax (TDS) but did not report it correctly, or you made a mistake in entering the amount.

The tax credit calculated by the department is lower than what you claimed, leading to a Tax Demand or a lower refund.

Arithmetical Error

You made a simple mistake while adding up or calculating your final tax liability on the return form.

The final tax due/refund amount is different. The department corrects the math error, which can result in either a Demand or a Refund.

Deduction Limit Exceeded

You claimed a deduction amount (like under Section 80C) that is higher than the legal maximum limit allowed.

The deduction allowed by the department is lower than what you claimed. This increases your taxable income and results in a Tax Demand.

Already Paid Tax Not Credited

You paid an extra tax (self-assessment tax) but forgot to enter the payment details while filing the return.

The department has not considered your extra payment. You need to show proof of payment to get a Refund or clear a potential demand.

Conclusion

Intimation under Section 143(1) is an essential part of the income tax filing process. It helps individuals verify if their income tax return has been processed correctly. Understanding how to respond to this intimation ensures compliance with tax laws and allows individuals to claim refunds or rectify mistakes. By reviewing the intimation carefully, responding on time, and filing for rectification (if required), taxpayers can avoid penalties and ensure a smooth filing experience.