Filing your Income Tax Return (ITR) is essential to fulfilling your tax obligations. But submitting your return is only the first step.
After filing, you might receive a notice under Section 143(1) of the Income Tax Act. While this notice isn’t something to panic about, it’s crucial to know what it signifies and how to address it properly.
What Is Section 143(1) Notice?
A notice under Section 143(1) is a communication from the Income Tax Department (ITD) that summarizes how your Income Tax Return (ITR) has been processed.
This notice matches the information you provided in your return with the data the ITD has from sources like Form 26AS, Form 16A, or Form 16.
It also shows the tax amount calculated by the department and points out any differences, outstanding taxes, or refunds. Receiving this notice is a normal part of the tax filing process, ensuring that all details are accurate.
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Reasons for Receiving a Section 143(1) Notice
Incorrect Deductions Claimed:
If you claimed deductions (like those under Section 80C) that exceed the limit of ₹1,50,000, the extra amount will be disallowed. This means you’ll have to pay tax on that extra amount, and the notice will show this adjustment.
Disallowed Expenditures:
Sometimes, you might list expenses in your audit report that weren’t included in your total income calculation. The ITD may disallow these expenses, meaning they won’t count as deductions from your income.
Verification of Taxes Paid:
The ITD checks if the taxes you’ve paid, such as Advance Tax, Self-assessment Tax, and Tax Deducted at Source (TDS), match what is reported in Form 26AS. If there are any discrepancies, the notice will point them out.
Inclusion of Additional Income:
If there’s additional income reported in forms like Form 26AS, Form 16A, or Form 16 that you didn’t include in your return, the notice will note this. You’ll need to account for this extra income.
Loss Carry Forward Issues:
If you claimed to carry forward losses to the next year but filed your return late or set off losses from previous years after the due date, the ITD might not allow these claims.
Section 10AA and Other Deductions:
Certain deductions under Sections 10AA and 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, and 80-IE need to be claimed before the due date. If you claimed them late, the ITD might not accept them.
Calculation of Tax, Fees, and Interest:
The notice will provide details on how your tax amount was calculated, including any late fees and interest charges. It helps you understand the final amount you owe or any refund you might receive.
What Does Section 143(1) Notice Contain?
When you receive an intimation under Section 143(1), it will fall into one of these three categories:
Tax Refund: If you’ve overpaid your taxes, the intimation will indicate the refund amount. Refunds above Rs 100 will be credited to your bank account, while amounts less than Rs 100 will not be refunded.
Tax Shortfall: If it turns out you owe additional taxes, the intimation will detail the amount due and include a challan for payment.
Simple Notice: If your tax return matches the department’s records, you’ll receive a simple notice. No separate intimation is needed, and your ITR V acknowledgment will act as confirmation.
The Income Tax Department (ITD) must issue this notice within a specific timeframe. Starting from April 1, 2021, the deadline was extended to nine months from the end of the financial year in which you filed your return.
For example, for the financial year 2023-24 (assessment year 2024-25), if you filed your return by July 31, 2024, the ITD has until December 31, 2025, to issue the intimation.
Steps to Respond to a Section 143(1) Notice
If you receive a Section 143(1) notice, follow these steps to respond:
Review the Notice:
When you get a Section 143(1) notice, first check it carefully. Make sure the information matches what you submitted in your tax return. Verify your name, PAN (Permanent Account Number), address, assessment year, and the e-filing acknowledgment number.
Look for Errors:
Compare the details in the notice with your tax return. If you find any mistakes or differences, you need to fix them. You can do this by filing a revised return on the income tax e-filing portal. This means you correct your return and submit it again.
Rectification Application:
If you believe the notice is wrong due to errors made by the Centralised Processing Center (CPC), you can apply to correct these errors. This is done through an online rectification application under Section 154(1). This application helps you request corrections to any inaccuracies found in the notice.
Respond to Tax Demand:
If the notice says you owe more taxes, you need to respond to this demand. Go to the e-filing portal and let the tax authorities know if you agree with the amount or if you have any issues with it. This step ensures that the tax authorities are aware of your stance on the additional tax they say you owe.
Lodge Grievances:
If you’re not happy with how your rectification request was handled or if you’re still having issues, you can file a grievance online. Alternatively, you can contact your assessing officer (the person in charge of handling your tax matters). If your problem is still unresolved, you can escalate it by filing a complaint with the income tax ombudsman, who helps resolve disputes between taxpayers and the tax department.
Understanding and acting on a Section 143(1) notice properly helps keep your tax affairs in order and can prevent unnecessary stress. By following these steps, you ensure that any issues are addressed and resolved efficiently.
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Section 143(1) Notice FAQs
Q.1. What is a Section 143(1) notice?
Ans. A Section 143(1) notice summarizes how your tax return was processed, including any adjustments, refunds, or additional taxes due based on your filed return and the ITD’s data.
Q.2. Why did I receive a Section 143(1) notice?
Ans. Common reasons include incorrect deductions, disallowed expenditures, mismatched tax payments, additional income not reported, or issues with loss carry forward claims.
Q.3. How do I respond to a Section 143(1) notice?
Ans. Review the notice for accuracy, check for errors, file a revised return if needed, submit a rectification application if errors are found, and respond to any tax demands through the e-filing portal.
Q.4. What should I do if I disagree with the notice?
Ans. You can file a rectification application online to correct any errors. If unresolved, lodge a grievance or contact your assessing officer, and escalate to the income tax ombudsman if necessary.
Q.5. What is the deadline for issuing a Section 143(1) notice?
Ans. The Income Tax Department must issue the notice within nine months from the end of the financial year in which you filed your return, as of April 1, 2021.
