How to read income tax intimation notice under section 143(1)
October, 15th 2021
The process of filing income tax return (ITR) does not end at the verification stage. Once an individual has verified his/her tax return, the income tax department starts processing the tax return. After the processing of ITR, the income tax department sends an intimation notice.
This intimation notice is sent under section 143(1) of the Income-tax Act, 1961. The notice is sent on the tax return filer's registered email ID by the tax department. Further, an SMS will be sent on the filer's registered mobile number informing the individual that the intimation notice has been sent to the registered email ID.
Chartered Accountant Naveen Wadhwa, DGM, Taxmann.com says, "The government has revised the time limit for issuing of intimation notice by three months effective from April 1, 2021. The intimation notice must be issued within 9 months from the end of the financial year in which the tax return is furnished. This would mean that for ITR filed for FY 2020-21, the last date of issuing intimation notice is December 31, 2022."
It is important that an individual reads this income tax notice. This is because this notice informs you whether the income tax calculation given by you in your ITR matches with that of the tax department as per the information they have.
At the time of processing ITR, the tax department checks for any arithmetical errors, internal inconsistencies, tax and interest calculation and verifies tax payment made etc. Once the ITR is processed, the tax department sends the intimation under section 143(1). However, do keep in mind that at the time of processing of ITR, the tax department makes a prima facie check. In the future, they can still send you an income tax notice under a different section asking for further information.
What to check in intimation notice under section 143(1)? The intimation notice will state one of the following things: A) Your income details, deductions claimed, and tax calculations matches with the tax department's assessments and calculations: In this case the notice will show that there is no additional tax payable by you. Also, both tax payable and refundable will be shown as zero.
B) Additional tax demand notice: There may be a situation where you would have missed reporting a particular income in your tax return or have wrongly claimed a deduction or calculated your tax incorrectly due to which there is additional tax payable by you. In such a situation, the tax department sends you their assessment and will ask you to pay the additional tax amount.
C) Income tax refund: In this situation, as per the income tax department's assessment you have paid additional taxes as compared to your actual tax liability. In such a case income tax refund will be shown as due to you.
How to read intimation notice 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-April-1990, then the password to open the document will be aaaaa000a01041990.
Once you have opened the password-protected file, 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 format 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). Both the columns are displayed side by side for ease of comparison.
Along with income details, the intimation notice also shows the details of the tax-saving deductions that are claimed by you in your ITR. If the income and tax-saving details in both columns match, 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 ..
In case there is a mismatch 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.