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Income Tax intimation: Dealing with it right
September, 19th 2014

One of my friends received an email from the tax department with the subject line, ‘Intimation under section 143 (1)”. He asked me what it meant, why he received the email and what action did he need to take.

As a tax practitioner, I explained that the intimation was a preliminary assessment of the tax return filed by him. It was meant to check the arithmetical accuracy of the return. It was also supposed to spot incorrect claims in the return vis-a-vis the actual documentary evidence. For example, if you claim deduction of taxes paid of R50,000 but the actual tax paid as per Form 26AS (annual tax statement) is R30,000, this would be checked by the tax department and, in the intimation, they would allow credit of taxes paid of R30,000 only.

Such intimation is issued within a year of the filing of tax return. In the intimation, there are two columns comparing the information filed in the return with the details considered by the tax department.

It is worthwhile to verify the details mentioned in the intimation. If there is no difference between the income and tax computed by the tax department and you in the return, there is nothing you need to do.

If the tax paid is less than what is computed by the I-T department, the intimation becomes a Notice of Demand under section 156, i.e., notice to pay the demand (tax payable) determined by the tax department. For example, if income as per the return is R5,00,000 but the department computes income as R6,00,000, there will be a shortfall of tax paid. Or, if the tax paid in the return is R1,00,000 but the department has given credit of taxes paid of R75,000, only then there will be shortfall of tax paid.
If you are of the opinion that the tax department’s computation is correct, you will have to pay such tax. It can be paid either by cheque or through internet banking under the prescribed challan as regular assessment tax.

However, if you feel the tax department’s computation is not correct and have supporting documents to substantiate the same, the anomaly can be rectified by filing a rectification application. But there is no scope for an

explanation by or a discussion with the I-T department on the subject when the intimation is being issued.

If the errors are not corrected after the rectification application, or there are some issues that

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