Legal Guide

Everything to Know About Section 143 of the Income Tax Act

by Bhavya Choudhary · 3 min read

section 143 of the Income Tax Act

Introduction 

Taxpayers file their income tax returns, which are processed at the Centralised Processing Centre. The income tax department makes it to process the returns file and issues the intimation as per Section 143 of the Income Tax Act, informing the taxpayer about the result of the filing.

What is a letter of Intimation under Section 143 of the Income Tax Act?

  • An individual can either voluntarily file the Income tax returns under Section 139, or the income tax department can demand such filing as per section 142(1).
  • The taxpayer should have a basic understanding of filing an income tax return and what to do after it under Section 143 of the Income Tax Act. They might take legal consultancy services to learn about different tax provisions. 
  • The income tax department examines the file of the income tax returns, and this process altogether is called assessment. 
  • The first step by the income tax department is to complete the preliminary assessment on all of the income tax returns filed, and they provide the results to the taxpayers as they complete it.

The assessment and its procedures can include checking any :

  • Any kind of arithmetical errors
  • A file may contain internal inconsistencies 
  • Tax calculation errors and payment verification by correct information dates. 

The preliminary assessment is the foremost procedure of the income tax department under Section 143 of the Income Tax Act, and this is fully automatically done by computers. The entire procedure is consigned to the Central processing center. 

An intimation is generated by the automated system, which recognizes errors and provides information on obvious errors that the procedure has detected under Section 143 of the Income Tax Act.

What is a Centralised Processing Centre?

  • During recent years, there has been an acute increase in the returns filed under Section 143 of the Income Tax Act.
  • The income tax department faced numerous issues with delays in processing the assessment and intimation, which piled up the workload, and the jurisdiction-based processing model wasn’t acknowledged. 
  • The Central Board of Direct Taxes was empowered by the Finance Act 2008 to come forward with a prescribed program for the Centralised processing of returns where payments and refunds of tax are calculated and determined as per Section 143 of the Income Tax Act.
  • The idea of organizing a CPC in Bangalore was recommended by the Technical Advisors, where the e-papers and e-returns will be processed in a way free from any jurisdiction under Section 143 of the Income Tax Act. 

The CPC procedure was set up with a vision to benefit both the IT department and the taxpayers.

  • The excessive burden and complex method of assessment were computerized, which led to a faster preliminary assessment.
  • Taxpayers could enjoy the benefits of prompt and timely results with hassle-free preliminary assessment and processing.
  • A lot of time and human labor were saved due to advanced technology. 

Preliminary assessment under section 143 of the Income Tax Act

  1. The foremost processing is done through the CPC method(automation) under Section 143 of theIncome Tax Act, where the intimation is also an automatic procedure. 
  2. The role of CPC is to validate the data provided in the returns filed and match it with the uploaded data already existing in the computer, which is the IT department record.
  3. It helps in finding out errors that are relevant to data (forms 26 AS) under Section 143 of the Income Tax Act. 
  4. After the returns are filed, the computer calculates the total income or expenses as per the data in the system, which is already input for the particular taxpayer under Section 143 of the Income Tax Act.
  5. The intimation is divided into two columns, i.e., “returns filed by the taxpayer” and “as computed under Section 143 of the Income Tax Act”.

The automatic computer system makes a comparison between the following categories:

  • Income under different heads
  • Gross total income
  • Any deductions under CH VIA (80C, 80D, etc.)

6. Tax deduction at source or self-paid tax by taxpayers in advance or self-assessment.

7. The computing system makes the necessary adjustments as per Section 143 of the Income Tax Act and arrives at a final liability or refund amount.

8. The taxpayer is informed first about the adjustments either in writing or print. ( sent to email id)

9. The taxpayer has a waiting time of 30 days, within which they may send a response regarding the adjustments. If no reply is sent, the department incorporates the initial adjustments as needed. They may take legal consultancy services in case they cross the limit of 30 days and need adjustments.

10. TDS is adjusted against final liability, tax payments, and others under section 90 or 91 (if any).

11. Finally, the intimation is prepared and sent to the taxpayers.

Kinds of intimation under Section 143 of the Income Tax Act

  • Intimation with no demand or no refund: This is when the income tax does not get adjusted, and the taxpayers filed returns are accepted as per section 143 Income Tax Act.
  • Demand determined by intimation: Adjustments are made under Section 143 of the Income Tax Act if any error is found.
  • Refund determined by intimation: it is issued when refund tax is found or during discrepancy or adjustments, which is incorporated later as per Section 143 of theIncome Tax Act.

How do Contract Employees file ITR4?

  • The TDS for contract employees and permanent employment differ as they are required to fill out different forms.
  • Contract employees have to pay TDS at a flat rate of 10%. They must choose ITR4 when filing their income tax returns.

Conclusion

Tax calculation and deductions are complex tasks where the returns file is a big issue for many taxpayers. To avoid hassle and panic, one must take legal help and understand the basics of income tax.

Talking to a lawyer might help a taxpayer to file their returns appropriately and promptly.

Bhavya Choudhary

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Bhavya Choudhary

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