Income Tax Return Processing

Income tax return filed is processed by the CPC – Central Processing Unit. Presently, CPC in Bangalore is responsible for carrying out all primary assessments. The CPC unit of Income tax department  takes up the ITR for processing  i,e cross checks the details reported in the ITR with the information in hand and sends a notice of intimation under section 143 (1) to the registered email address. The Income Tax Department processes the income tax return only after they are filed and successfully verified by the taxpayer. The taxpayers are advised to submit their return on time for the speedy processing of the returns.

Latest Update

Union Budget 2021 Outcome:
1. Exemption from ITR filing to senior citizens aged 75 years and above, earning only pension and interest income.
2. The income tax department launched pre-filled ITRs with additional details to simplify the return filing process.
3. The due date for filing belated and revised returns is reduced by 3 months. This also means that the IT department will have to process the returns and send a notice under section 143(1) by 31st December.

Income tax return filing

The taxpayers should file their income tax returns by the due date to avoid any late fees and the penalty. The ITR processing starts only with the filing of the return; it can be on time or after the due date. However, it is also advisable to file the returns on time for quick processing.

ITR verification

The department starts the Income Tax Processing only when the return has been successfully verified. The taxpayer has to verify the return by sending the ITR-V (Acknowledgement) after signing it with a blue ink within 120 days from the date of filing the return. ITR-V will be physically sent to the Central Processing Center (CPC). Once they receive it, CPC will send an acknowledgement on the registered email ID of the taxpayer. The taxpayer should correctly mention the email address in the return form as all the communications between him, and the department will take place through that email ID alone. Also, the taxpayer can e-verify the return after filing it instead of sending the acknowledgement physically to the department. It can be done through any one of the following means:

• net banking
• aadhaar OTP
• EVC code through the department’s website
• giving bank account details on the e-filing website
• giving DEMAT account details on the income tax e-filing website.

ITR processing under section 143(1)

After the verification of the ITR, the department processes the income tax return and sends the intimation under Section 143(1) of the Income Tax Act, 1961 once the Income Tax Processing is done. The intimation will be sent via an email along with a message to the registered email ID and the mobile number respectively.

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 in addition to the records available with the CPC and generates an intimation under section 143(1). The intimation also carries the detailed calculation of the tax as computed by the taxpayers and the income tax department. The whole process generally takes 30- 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 is issued to the taxpayers. Generally, the credit of refund process takes about 20-45 days from the date of e-verification of the income tax return. However, if the acknowledgement has been sent physically to the CPC, it may take a longer time.
• Demand determined: If any discrepancy is found in the taxes paid or the credit claimed, the department issues a demand intimation. The demand has to be paid within a stipulated time mentioned in the intimation under section 143(1).
• No demand No refund: The situation where the department accepts the information provided by the taxpayer and gives a green card then the status of the ITR processing turns to ‘No demand No refund’. It means there is no interest or tax payable or refundable by/to the assessee.

Frequently Asked Questions

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

If you have filed your income tax return and not received 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 income tax refund status ?

Please login to 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 “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 status?

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 your are required to take as detailed below:

• Assessment year not visible in refund status- Please file the return as 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 cheque, please track your speed post reference number on TIN website.
• Not determined–  please confirm if your return is filed and duly verified. 
• No demand no refund– If as per IT department, you are not eligible for refund , then “no demand no refund “ will be reflected. An intimation u/s 143(1) will be issued showing 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 error in bank or address details. Please update the correct details on 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 refund and raised a demand u/s 143(1). Intimation will be received with the calculation of tax liability as per IT department either on 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.

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