ITR filing: How to read tax intimation notice under section 143(1)

Once the income tax department has processed your income tax return (ITR), it sends you an intimation notice under section 143(1) of the Income Tax Act. This notice is sent to you on your registered email address as registered in your e-filing account to inform you whether the income tax calculation in the ITR filed by you matches that of the tax department as per the records/other sources of information they have.

Abhishek Soni, CEO & founder, Tax2win.in, an ITR-filing website says, "The income tax return filed by the taxpayer is processed by the Income Tax Department. This process includes the checking of any arithmetical errors, internal inconsistencies, tax and interest calculation and verification of tax payment etc. After processing the ITR, the department sends a communication to the taxpayer which is called Intimation u/s 143(1). However, this is a prima facie check. In future, if the department discovers any additional information regarding your incomes, then they can still send you a notice under the relevant section of the Act asking for further information."

He further adds, "The taxpayer can check the status of refund/demand in the said intimation."

Also read: How to file ITR? Here's the complete guide

Intimation notice received by you under section 143(1) will show one of the following things:
A) Your income details, deductions claimed and tax calculations match with the tax department's assessments and calculations: In this case the notice will show both tax payable and refundable as zero.

B) Additional tax demand notice: When, as per the tax department's assessment, you have not added a particular income to your ITR or wrongly claimed a deduction or calculated your tax incorrectly due to which there is additional tax payable on it. This would show as a tax demand at the end of the notice.

C) Income tax refund: As per the income tax department's assessment, if you have paid additional taxes as compared to your actual tax liability, a tax refund is due to you.

To know what the income tax department's prima facie evaluation of your ITR is, it is important that you know how to read the intimation under section 143(1) received by you. Here's how you should read the intimation notice.

Usually, the intimation notice is a password protected file. To open the notice received by you, the password is your PAN in lower case and your date of birth. For instance, if your PAN number is AAAAA0000A and date of birth is 01-Janauary-1990, then the password to open the document will be aaaaa000a01011990.

How to read the intimation notice
Soni explains how you should read the tax notice under section 143(1) received by you.

The first thing you should check in the intimation notice is whether your personal details such as name, address, PAN and so on are correct or not.

Once these details are checked, the next step is to read and match the income tax computation given by you in your ITR with the department's computation.

The intimation notice shows a comparison (in a table) of income reported by you in the ITR under each head (in one column) with the income under that head as computed by the income tax department (in another column).

Along with income details, the intimation notice also shows the details of the tax-saving deductions that are claimed by you in the ITR.

If the income and tax-saving details in both columns are matching, then your total income after deductions, i.e., net taxable income will also match.

The intimation notice will also show your tax details, i.e., tax liability on the net taxable income, tax relief (if any), interest under sections 234A, 234B, 234C, late filing fees under section 234F and total income tax liability.

In case there is a mis-match in income under a particular head or a deduction amount is wrongly claimed by you or if there is any other arithmetic error, then in such a case, there will be a discrepancy in the taxable income computed by the tax department and what you have filed in your ITR. The taxable income computed by the department can be higher or lower due to which it will either show that you have to pay additional tax or that a refund is due to you.

If there is a refund due to you, it would be reflected in the intimation notice as well. Therefore, do not fall for SMS or email stating that income tax refund is due to you and that you are required to provide bank details to receive the same.

Soni says, "If there is any income tax refund due to you, then income tax department will automatically transfer to the bank account indicated by you for this purpose in your ITR once it is processed. The department will only notify you that your income tax refund has been processed without asking for any bank accounts."

Not received the intimation notice
As per current income tax laws, your income tax return must be processed by the tax department within the expiry of one year from the end of the financial year in which the return was filed. Therefore, tax return for FY 2019-20 must be processed by department by March 31, 2022.

In case your return is not processed by the tax department, you can file a grievance on the e-filing website.

Similarly, if your ITR is processed but you can't find the intimation notice in your email, then you can raise a service request for the same on the e-filing website.