To better interpret the letter of intimation, let’s take a look at the income tax returns assessment process.

Once you file your income tax returns, the Income Tax Department does a preliminary assessment of the returns. It checks for – arithmetical errors in tax calculation, internal inconsistencies, and verifies the tax payment. Note that the initial evaluation is computerized and does not involve any checks by income tax officials.

Once the preliminary assessment is over, the IT department informs you of the same by sending you a letter of intimation under Section 143(1).

Why the Income Tax Department sends the letter?

A taxpayer gets the letter of intimation under Section 143(1) when there is a mismatch of tax exemptions as filed in IT return document and as shown in Form 16.

Who Sends It?

The Finance Act of 2008 introduced centralized processing of returns. The CPC (Centralized Processing Centre) in Bangalore is in-charge of handling all the primary processing of assessments. The CPC processes returns without any interaction with the taxpayer and in a jurisdiction-free manner.

Understanding the Letter of Intimation

  • The CPC validates the data you have provided in the income tax return like the – form 16, form 26AS, TDS returns, and more.
  • It then re-computes the total income or loss, based on internal records and data.
  • The intimation letter has two primary columns:
    • The first column has details, "as provided by the taxpayer."
    • The second column contains details, “as computed by the CPC mainframe under Section 143(1) income tax.
  • Comparison is made for different categories under both columns include:
    • Income under various heads
    • Deductions under Section 80C, 80D, etc.
    • TDS
    • Advance tax paid by the taxpayer
    • Gross total income
  • Finally, the letter gives you information on whether you have any tax liabilities or refunds.
  • Any adjustments to your income tax returns are made only after intimating you, either via email or a written letter.
Once you receive an intimation, you have to send a response within 30 days. If no response is sent within this time, the CPC goes ahead and makes the adjustments as computed to the tax returns.

3 steps to take when you receive an intimation letter?

  1. The intimation letter is of three types:
    • Intimation with no demand or no refund – It means your tax returns match that of the computerized returns, and your tax return has been filed without any adjustments.
    • Intimation with a demand – There's a discrepancy, and you must pay extra.
    • Intimation with a refund – There's a discrepancy, and you're eligible for a tax refund.
  2. If there are no discrepancies, you need not do anything. On the other hand, if you notice any changes, you can file a revised return by using the e-filing website of the Income Tax Department.
  3. If you do not agree with the adjustments made, you can submit an online rectification application. If you're not satisfied with the processing done by CPC, you can take your complaint to the income tax ombudsman.
Don’t Panic

Receiving a letter of intimation from the income tax department is no cause to worry. You can consult an expert who can understand the clause better and help you resolve the  taxation problem.

Click here to visit our personalized online advisor that gives you the financial expertise you need.

DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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