Intimation Under Section 143(1) of the Income Tax Act: An In-Depth Guide
Intimation under Section 143(1) is the Income Tax Department’s automated communication that confirms how a filed return has been processed and whether any refund or tax demand arises after standard checks. It is not a scrutiny notice; it is a preliminary, system-driven outcome of return processing that either accepts the filing as-is, issues a refund, or raises a demand based on visible mismatches and arithmetical adjustments.
What Section 143(1) does:
Section 143(1) covers the initial, computerized processing of returns furnished under Section 139 or in response to a notice under Section 142(1), with the Centralised Processing Centre (CPC) comparing the contents of the return with information available in departmental systems. The system corrects clear errors, applies prescribed adjustments, computes final tax, interest, and fee, and then sends an intimation that displays both the “as filed” figures and the “as processed” figures. This is distinct from scrutiny under Section 143(2), which involves a human-led, deeper examination of claims, books, and evidence.
Key components of the intimation:
An intimation typically has two core parts: a summary of the total income and tax computation as per the return versus as per processing, and a reasoned list of adjustments the system has made. The communication shows the final outcome: no demand/no refund, refund payable with interest if applicable, or tax demand along with interest and late fees. It also records return identifiers such as acknowledgment number, assessment year, and processing date, and it generally notes bank account details for refund credit if pre-validated.
Adjustments permitted at processing stage:
The statute permits the CPC to make only those adjustments that are apparent from the return record and connected data, not those requiring investigation. Examples include correction of arithmetical mistakes, denial of claims that are clearly incorrect on the face of the return, disallowance of certain deductions or loss set-offs if the return is belated, and addition of income or disallowance of expenditure disclosed in the audit report but omitted in the return. The CPC may also align the return with reported taxes and incomes in information statements where a clear mismatch is visible.
Outcomes: three common scenarios:
- No demand, no refund: The CPC finds no differences after processing and communicates acceptance of the return as filed.
- Refund due: Where prepaid taxes such as TDS, TCS, advance tax, or self-assessment exceed the processed liability, a refund is indicated and paid into a pre-validated bank account, with interest where permitted.
- Tax payable: Where the processed computation yields a higher liability than prepaid taxes, a net demand is shown, typically accompanied by interest and fee computations as applicable.
The “proposed adjustment” vs the final intimation:
A “proposed adjustment” communication under the proviso to Section 143(1)(a) is often sent before the final intimation when a mismatch is detected that the taxpayer may be able to clarify. It seeks a response within a specified window, commonly 30 days, and if no response is filed, the system may proceed to finalize the adjustment. The final intimation under Section 143(1) reflects the outcome after giving effect to accepted responses or after the response window closes.
Timelines to remember:
The statutory outer time limit for processing is generally nine months from the end of the financial year in which the return is furnished. If no intimation is received within this period and there is no sum payable or refundable and no adjustment, the acknowledgment of the return may itself be treated as the intimation. Payments in response to a demand are ordinarily expected within 30 days of the notice of demand, failing which interest and recovery provisions can follow.
How to read the PDF (and open it)?
The intimation PDF is typically password-protected with a combination of the PAN (in lowercase) and date of birth or incorporation in the format DDMMYYYY. The document tabulates the “as filed” and “as processed” figures side by side, including gross total income, chapter VI-A deductions, total income, tax on total income, surcharge and cess, reliefs, TDS/TCS and advance/self-assessment tax, interest, fee, and the net result. The “adjustments” or “reasons” section explains what the system changed and why.
Interest, fee, and rounding:
Processing often triggers interest computations under the 234 series: 234A for delay in filing (if any), 234B for default in advance tax, and 234C for deferment of advance tax. The fee for late filing under Section 234F is also reflected where applicable. Rounding provisions under the Act apply, and the payable or refundable figure is rounded to the nearest permitted unit before the final number is presented.
What to do when the outcome is “no demand/no refund”:
In a no change scenario, the intimation can be archived as a record of acceptance. No action is required unless an obvious mistake is noticed, in which case a rectification can be pursued. Pre-validating bank accounts and confirming contact details remain good hygiene to ensure future refunds or communications are handled smoothly.
What to do when a refund is shown:
If a refund is indicated, ensure that a bank account is pre-validated on the e-filing portal to enable direct credit. Where an amount or bank detail appears wrong in the intimation due to an apparent mistake, a rectification request under Section 154 can be filed, or a reprocessing request can be considered, depending on portal options available in the relevant year. If refund credit is delayed after processing completion, grievance redressal channels on the portal can be used to follow up.
What to do if a demand is raised:
- Verify the computation: Reconcile returned income, schedules, and tax credits with the processed view to identify the driver of the demand.
- Pay where correct: If the demand is correct, it should be paid within the stipulated period through the e-pay tax facility and then matched against the demand on the portal.
- Dispute where incorrect: If the demand arises from an apparent error (for example, a TDS not picked up despite being in the information statements), a rectification request under Section 154 can be made with supporting details. Where facts need to be added or income enhanced, consider a revised return (if still within time) or an updated return under Section 139(8A), noting the limitations and additional tax associated with an updated return.
Rectification vs revised vs updated return:
- Rectification (Section 154): Use this route for apparent mistakes in the intimation or in the record, such as misread TDS, obvious arithmetic, or data-pickup errors. It is not meant for new claims requiring examination or for reducing income beyond clear mistakes.
- Revised return (Section 139(5)): If still within the permitted time and a material correction is required—such as adding a missed income schedule or fixing a claim—filing a revised return is the cleaner path.
- Updated return (Section 139(8A)): Available for up to 24 months from the end of the relevant assessment year, this allows increasing declared income or reducing losses. It cannot be used to claim a refund or to reduce tax liability and carries additional tax on the incremental liability.
Common triggers for adjustments:
- Arithmetical and consistency errors: Totals not matching schedules, deduction claims exceeding statutory caps, or mismatch between returned income and computation schedule.
- TDS/TCS mismatches: Income reported without corresponding tax credit, or tax credit without corresponding income visibility, often triggers alignment with information statements.
- Belated return disallowances: Carry-forward of certain losses and some deductions get disallowed if the original return was filed after the due date.
- Audit report disclosures: Items flagged in audit reports but omitted in the return schedules can be added or disallowed at processing.
- PAN/Aadhaar, bank, and profile gaps: Unlinked or unvalidated data can impede correct credit of refunds or recognition of certain pre-paid taxes.
For investors and traders in Indian markets:
- Equity and mutual funds: Dividend income is taxable in the hands of investors, and TDS on dividends can appear in information statements; ensure grossing up dividends so that income and TDS both align. Capital gains under Schedule 112A (listed equity and equity MFs) should reflect scrip-level details consistent with broker statements to avoid variances.
- Debt and bonds: Interest from bonds and NCDs is often subject to TDS; report the gross interest and claim the corresponding credit to avoid processing-time denial of the TDS credit. Indexation choices on debt mutual funds depend on acquisition dates and prevailing regime; align schedule selection to the applicable rules for the relevant year.
- F&O and intraday: F&O is treated as non-speculative business income, while intraday equity is speculative; turnover for audit thresholds is the sum of absolute profits and losses as commonly applied in practice. Mismatches often occur where business schedules are incomplete or where presumptive regimes are misapplied; ensuring proper business schedules and tax audit reporting (if applicable) helps avoid Section 143(1) adjustments.
- AIS/TIS cross-check: The Annual Information Statement often shows scrip-wise sale values that may not net off costs; reconcile sale value totals with capital gains schedules, and use the feedback utility on the portal to flag incorrect or partially correct entries before or alongside filing.
How to respond to a proposed adjustment communication:
When a proposed adjustment under Section 143(1)(a) is issued, a response window is provided to accept or contest the item. Where the item is contested, submit a concise explanation referencing the relevant schedule, attachment, or information statement, and attach supporting computations if the portal permits. Non-response can result in the adjustment being made by default, so tracking email/SMS alerts and portal tasks is essential.
Paying a demand and closing compliance:
Once a correct demand is paid, ensure that the challan is correctly tagged to the assessment year and PAN so that it auto-adjusts against the outstanding demand. The portal typically reflects “demand paid” after successful matching; where a demand remains open due to tagging mismatch, a rectification or grievance can be raised with challan details. Saving the paid challan, the intimation, and the bank proof together gives a complete audit trail.
Frequent pitfalls and how to avoid them:
- Ignoring small mismatches: Even minor discrepancies can cascade into interest; running a pre-filing reconciliation against AIS/TIS and Form 26AS reduces processing friction.
- Missing interest income: Savings and fixed deposit interest often go unreported; reporting the gross income while claiming the correct TDS prevents denial of credit.
- Misstating exemptions: Exempt income (for example, PPF interest or eligible agricultural income) should be reported in the exempt schedule even if not taxable, to improve consistency.
- Late filing effects: Filing after the due date curtails certain benefits, including carry-forward of specified losses; timely filing preserves entitlements and minimizes adjustments.
- Bank account not pre-validated: Refunds may fail if the destination account is not validated; pre-validate to avoid reissue cycles.
Practical checklist before filing:
- Reconcile all incomes—salary, interest, dividends, capital gains, business, house property—against AIS/TIS and broker statements.
- Confirm all TDS/TCS credits appear and are tied to corresponding incomes; track the few cases where TDS is reflected in a later quarter.
- Validate deduction claims under Chapter VI-A with documentary proof and ensure they fall within statutory limits.
- Verify business schedules for F&O and intraday, including turnover method, audit applicability, and ledger tallies.
- Pre-validate bank accounts, link PAN with Aadhaar, and confirm current email and mobile on the portal.
If the intimation is plainly wrong:
Where the intimation contains an evident mistake not attributable to the return—such as a mispick of a TDS row—file a rectification request and select the reason that best fits the error. If the portal offers “reprocess return,” use that for simple system errors. If the issue involves an information statement error, submit feedback in AIS/TIS and then reference that feedback in the rectification. If statutory timelines for rectification or revised returns have passed, professional advice can help determine whether an updated return or appellate remedy is viable.
Special notes for HNIs, founders, & frequent traders:
- ESOPs/RSUs: Perquisite taxation and subsequent capital gains need careful schedule mapping; mismatches often appear where vesting and sale events straddle years.
- Unlisted shares: Ensure fair market value disclosures and cost bases are well documented; AIS may have limited visibility, so clear schedules reduce processing queries.
- Bond ladders and debentures: Accrued interest sale adjustments can prevent double taxation; show breakup between accrued and coupon interest explicitly.
- Algorithmic/prop trading: Multiple brokers and APIs can fragment records; consolidating P&L, expenses, and taxes in a single ledger and validating against AIS reduces 143(1) differences.
Action plan at a glance:
- Download and open the intimation PDF; read the “as filed” vs “as processed” columns and the reasons section.
- If acceptable, archive and, if refund is due, monitor bank credit; if a demand is raised and correct, pay promptly through e-pay tax.
- If not acceptable, choose the right path: rectification for apparent errors, revised return if still within time, or updated return where permitted and appropriate.
Final word:
Section 143(1) is designed to be swift, automated, and bounded in scope, making it the most common and least intrusive post-filing interaction. Treating it as a structured reconciliation—rather than a cause for alarm—helps maintain compliance, avoid avoidable interest, and keep tax affairs in order. While this guide distills standard practice and statutory contours, individual facts can be nuanced; where stakes are material or positions are complex, professional review is prudent to ensure the right remedy and timely closure.
Please note,
The views in the article/blog are personal and that of the author. The idea is to create awareness and for educational purpose and not intended to provide any product recommendations.
