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Income Tax Return Processing

Updated on: Jul 29th, 2024

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1 min read

Income tax return filed is processed by the CPC – Central Processing Centre. Presently, CPC in Bangalore is responsible for carrying out all primary assessments. The Income Tax Department processes the income tax returns only after they are filed and successfully verified by the taxpayer. Timely submission of ITRs is advised for faster processing by the department.

The CPC unit of the Income tax department takes up the ITR for processing and sends an intimation notice under Section 143(1) to the registered email address confirming that the ITR is processed. This notice will specify the tax amount payable or the refund due as per the income tax department.   

Income Tax Return Filing and ITR Verification

To avoid late fees and penalties, taxpayers must submit their income tax returns within the deadline. The returns will be processed once you file and verify your ITR, whether before or after the due date. Nevertheless, it is recommended to file the returns promptly for faster processing.

The department starts the Income Tax Processing only when the return has been successfully verified. You may either e-verify your ITR or send it the ITR-V to CPC, Bangalore within 30 days from the date of filing the return. 

ITR Processing under Section 143(1)

Once the Income Tax Return (ITR) is verified, the department proceeds to process it and sends an intimation under Section 143(1) of the Income Tax Act, 1961. This intimation, along with a message, is sent via email to the registered email ID and mobile number provided. 

Example: ITR for AY 2024-25 and PAN abcxxxxx1r have been processed at CPC. Intimation u/s 143(1) has been sent to your registered email ID. If not received, check the SPAM folder.

CPC processes each e-filed return and generates intimation u/s 143(1). The department compares the data provided in the return by the taxpayer and the records available with the CPC and generates an intimation under section 143(1). 

The intimation also includes a detailed tax computation of the tax as per the taxpayers and the income tax department. The whole process generally takes 20-45 days from the day of e-verification or the receipt of ITR-V by the CPC.

Status Post the ITR Processing

Taxpayers are required to decode the ITR intimation. Following are three possible scenarios that the taxpayer may need to understand :

  • Refund determined: If the return filed by the taxpayer is found to be accurate and has a refund claim, the refund will be issued to them. Typically, the refund process takes around 20-45 days after the e-verification of the income tax return. However, if the acknowledgement has been sent physically to the CPC, it may take longer.
  • Demand determined: This means additional tax is payable. The tax department sends a demand intimation if there are any discrepancies in the taxes paid or credits claimed. The taxpayer is required to pay the demand within the specified time mentioned in the intimation under section 143(1).
  • No demand-No refund: When the department approves the information given by the taxpayer, the intimation will be 'No demand No refund.' This indicates that the taxpayer does not owe any taxes or interest, and there is no refund owed to the taxpayer.

Frequently Asked Questions

My income tax refund is not processed. How do I escalate this?

If you have filed your income tax return and have not received an income tax refund within a reasonable time, first confirm if you have verified your income tax return online or offline. ITR filing is incomplete and is not processed till it is e-verified. In case ITR V is verified, you can follow up with CPC on their helpline numbers 1800 103 4455 (or) +91-80-46605200 from Monday to Friday, 8:00 am to 8:00 pm. In case of refunds of previous years, you need to write a letter to the Assessing officer of your jurisdiction stating reasons for delay/non receipt of refund. 

How to check my income tax refund status?

Please login to the e-filing website using PAN, password, DOB and captcha. Go to “My account > refund/demand status”. A screen will open, displaying the status.

What is an Income tax refund?

When your income tax paid is more than your income tax liability for a given year, the excess amount paid is refunded by the Income tax department. This refunded amount is known as an “Income tax refund

Do I need to file an income tax return to get the refund?

Yes, it is necessary to file an income tax return to claim the refund. 

What are different Income tax refund statuses?

The income tax department processes the verified ITR after the same is filed. In case you have claimed a refund in the ITR, then there can be various status reflecting  and the actions that you are required to take as detailed below:

  • Assessment year not visible in refund status- Please file the return, as the absence of AY means return filing is pending. 
  • Refund paid- the refund should be received by you, either in your bank account or by a cheque as selected by you. In case of non-receipt of the cheque, please track your speed post reference number on the TIN website.
  • Not determined–  please confirm if your return is filed and duly verified. 
  • No demand no refund– If as per the IT department, you are not eligible for a refund, then “no demand no refund “ will be reflected. An intimation u/s 143(1) will be issued showing the comparison of their calculation on your registered email. Review the comparison and rectify the return if required. 
  • Refund unpaid–  This status gets reflected due to an error in bank or address details. Please update the correct details on the income tax portal and raise a refund reissue  request
  • Refund determined and sent out to the refunding banker- It means a refund request is generated and sent for processing. Refunds should be received within a few days. 
  • Demand determined– It means the IT department has rejected the refund and raised a demand u/s 143(1). Intimation will be received with the calculation of tax liability as per the IT department, either on a registered email ID or through physical notice. 
  • Contact Jurisdictional assessing officer – This means the IT department needs some clarification. Contact the AO of your region.
What is the password for the intimation notice U/S 143(1)?

The intimation notice received from the Income Tax Department comes with password protection, and you need to decode the password before opening it. The default password set by the income tax department comprises your PAN and date of birth.

For Example: If your PAN is CMDPP5555E, and your date of birth is March 16,1994, your Intimation notice password will be cmdpp5555e16031994.

Why is my ITR under processing?

The most common reason is that the information that you submitted in the return does not tally with that of form 26AS or AIS (Annual Information Statement). Different stages of return include filing of return, verification of return, followed by processing of return.

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Quick Summary

CPC processes and verifies income tax returns, issuing intimation notices. Taxpayers should file ITRs on time for faster processing. Section 143(1) intimations detail tax payable or refund for verification. Post-processing, taxpayers may receive refunds, demands for additional tax, or 'No demand-No refund' status.

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