Intimation under Section 143 (1) of Income Tax Act, 1961: What's new in Finance Bill 2025?

The Finance Bill 2025, which has been passed by the Lok Sabha, has amended Section 143 (1) of the Income-tax Act, 1961.

As per the amended rule, an intimation under Section 143 (1) can be sent to a taxpayer if any inconsistency is detected in the income-tax return (ITR) with respect to information shared in returns filed in any preceding financial year.

The Central Board of Direct Taxes (CBDT) on Tuesday (March 25, 2025) explained the amendment to Section 143 (1) in a document explaining various frequently asked questions on the Finance Bill 2025.

Section 143 (1) provides for the processing of income-tax returns after making certain specified adjustments. These could be about fixing arithmetical errors in the return or incorrect claims in the return apparent from any information in the return.

This section comes into action after ITR filing. The Income-tax Department usually sends an intimation under Section 143 (1) to ITR filers stating any error in the return or interest payable, or refundable to taxpayers.

The Finance Bill 2025 has amended Section 143 (1) to provide for checking any inconsistency in the return compared to the return filed by the taxpayer in any preceding financial year.

"Section 143(1) has been amended to provide for checking any inconsistency in the return with respect to the information in the return of any preceding previous year, as may be prescribed," the CBDT said.

The Income-tax Department is yet to prescribe the inconsistencies that may now come under section 143 (1). However, it shared an example of an inconsistency, saying, “an example could be where taxpayer has made a claim of any credit in previous return but the corresponding figures are not the same in the current return."