Income Tax Return Processing

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.   

Budget 2025 Updates

The new Income Tax Bill has been tabled by the Honorable Finance Minister in the Lok Sabha. It aims to simplification and better presentation of the provisions.

The Income Tax Bill introduces the concept of Tax Year. 

As per the budget 2025, the income up to Rs. 12,00,000 will have zero tax liability for the FY 2025-26 (AY 2026-27) under the new tax regime. Here's how:

The revised tax slabs under the new regime for FY 2025-26 (AY 2026-27) are as follows:

Annual Income Tax Slabs	income Tax Rates
Upto Rs. 4,00,000	NIL
Rs. 4,00,001 - Rs. 8,00,000	5%
Rs. 8,00,001 - Rs. 12,00,000	10%
Rs. 12,00,001 - Rs. 16,00,000	15%
Rs. 16,00,001 - Rs. 20,00,000	20%
Rs. 20,00,001 - Rs. 24,00,000	25%
Above Rs. 24,00,000	30%

With the revised tax structure, individuals earning up to Rs. 12,00,000 will have no tax liability due to the increased rebate of Rs. 60,000. For salaried individuals, the tax liability will be zero for incomes up to Rs. 12,75,000, due to the Rs. 75,000 standard deduction.

Note:

• The marginal relief on rebate is still applicable. 
• The rebate is not available for income that is taxed at special rates (e.g., capital gains under section 112A).

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.