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What does intimation u/s 143 (1) mean in terms of Income Tax Rules.

Date: 08 Jan 2013   Group: Government    Category: Central Government   


The people who file income tax returns are usually told that they will get an intimation u/s 143 (1) of the Income Tax Act / Rules. What does this intimation mean? Is it just an acknowledgement or a demand for paying income tax or for refund of income tax? Can someone clarify?


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Have you filed your IT returns and been told you will receive an intimation u/s 143 (1) of the Income Tax Act / Rules? Learn here what is the meaning of an intimation u/s 143 (1) of the Income Tax Act / Rules.

Author: Manoj Chaurasia    17 Jan 2013      Member Level: Gold     Points : 15  (Rs 15)    Voting Score: 0

With advent of online filing users have come hear about sections and notices and other things which was not so prevalent during manual filing era. Although manual filing still exist and online filing is in transitional phase but still it has led to a lot of information being circulated among the tax payers.
With more information comes more confusion and hence educating the users about the provisions becomes another responsibility of the Income Tax Department but that is not been done so far. It is left on the shoulders of professionals and middlemen who assist taxpayers in preparing and filing return.

Now those users who file their return on their own without using help of professionals get bothered sometimes when they start to get mails from the department. In manual process it was simple deposit at counter and receipt of acknowledgement after stamping.
New process goes through the following process:

On part of taxpayer

1. Choose appropriate form fill it up and file it online

2. After filing it, take printout of the acknowledgement generated. Now this acknowledgment is not complete until and unless it is signed and sent to the central Processing Unit(CPC), Bengaluru. It is going to be decentralized soon.

On part of department

3. After the acknowledgement is received in Bengaluru, there is another mail sent to the assessee who filed his return that his acknowledgment is received. This receipt contains a number which shall validate this fact that the return was filed and acknowledgement sent to CPC.

4. Now final step is processing of the return by the Income Tax Department.

5. Once the return is processed about its accuracy another mail is sent to the assessee, which is called Intimation u/s 143(1)

Now this is just an intimation as the name itself suggests. But its feature changes with its content. Such as:
If you look at the notice you will see that there are two columns:
a) As provided by taxpayer in return of Income and
b) As computed under section 143(1).

First Case: No difference

If there is no difference in both columns or say in details provided by the taxpayer and as verified by the Income Tax department, then this notice will serve as final assessment of the return with nothing to be done on part of the taxpayer and the department. Just a printout of the same shall be taken and kept along with the acknowledgment as originally sent to the department.

Second case: Positive Difference (Tax Demand)

If there is a difference in the details as provided by you and the details as assessed by the department then the nature of this notice changes. This intimation becomes 'Notice of Demand u/s 156'. In case you have received the notice then you will see that after all the details end there is note mentioning that
"In case of Demand, this intimation may be treated as Notice of demand u/s 156 of the Income Tax Act, 1961. Accordingly, you are requested to pay the entire Demand within 30 days of receipt of this intimation".

For example, if Income as disclosed by taxpayer is Rs.5,00,000 and tax duly deposited on same but the department computes his income as Rs.5,50,000, then there will be shortfall of tax paid and balance tax of say Rs.10,300 will become payable along with interest.

Now this 'Intimation' will take the form of 'Notice', or in other words 'Notice of Demand'.

The taxpayer will have to pay such tax or if he thinks that the demand is wrong then he must prove his case with necessary procedures. I am not going to discuss them here.

Third case: Negative difference (Tax Refund)

If the intimation shows that the tax paid by taxpayer is more than the income computed by the department then such intimation will have a refund and such refund will be granted to the taxpayer. He will first receive this intimation on mail then a manual intimation along with the refund cheque will reach his address.

Here the taxpayer need do nothing but to get the cheque deposited in his account.

This intimation will also be received if the return filed has refund claim and the intimation will confirm whether all of the refund claim is accepted or there is any change.

So the only time this intimation shall be really noticed is when it has a tax demand asking taxpayer to take further action or else in first and third case it shall be just kept as final communication from the Income Tax Department about final processing of return.

Hope the explanation was satisfactory.

Regards
Manoj

Author: Varsha    17 Jan 2013      Member Level: Gold     Points : 10  (Rs 8)    Voting Score: 0


Finance act 2008, had introduced section 143(1) of the Indian Income tax. This is the new scheme of processing of returns. Suppose if the return is filed within the due date or if the return is not filed and the assessing officer issues notice to the assessee requiring him to file the return of income, then such return of income gets processed under section 143(1).

While processing such returns , following adjustments are made to the total income:
1. Total income is adjusted for any arithmetical mistake in the return or
2. An incorrect claim which they observe from the information given in the return.

Meaning of incorrect claim I am giving as follows:
1. Conflicting data at different places in the return
2. Difference in data specified in the return and the actual documents(evidence)
3. If the deduction claimed by the assessee exceeds the limit specified in the act/rules either in value or in percentage.

After adjusting the income for the above two adjustments( i.e arithmetical mistake and incorrect claim), the adjusted total income is arrived at.
On this adjusted total income, income tax authority calculates the tax which is further adjusted for tax reliefs and taxes already paid. Then the final output is either the tax payable or tax refundable.

In short
Total income- (Adjustments for arithmetical error+ incorrect claim)= Adjusted total income
On this adjusted total income tax is to be calculated.
Final tax payable/ refundable as per section 143(1)= Tax calculated on adjusted total income- tax reliefs/taxes already paid= Tax payable or Tax refundable.
If there is tax payable assessee has to pay the same( It is the demand) or if the tax becomes refundable nothing is to be done.
This scheme is known as the centralized processing of income which is being used by the income tax authority.




Author: Mallika Iyer    20 Jan 2013      Member Level: Silver     Points : 2    Voting Score: 2

This intimation under section 143 (1) of Income Tax Rules means that you have filed your Income Tax Returns regularly and the same is acknowledged by the Department. The figures given in the columns will tell you how much of TDS is deducted by others on your account and paid on your behalf, what is your tax liability, whether you are eligible for any tax refund or whether you are required to pay tax if your tax liability is not fully met by the payments you have made towards Income Tax. Based on this intimation, you have to approach the assessing officer of your ward for refund if you are eligible for refund or pay the tax due online and submit compliance to the assessing officer.
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