Finance Bill 2025 proposed important amendments to Section 143(1) of the Income Tax Act, 1961, with a purpose to enhance income tax return (ITR) processing and transparency. The amendment authorizes the Income Tax Department to compare the new ITRs with the old ones, marking mismatch to the notice and enforcing compliance.
What is Section 143(1) of the Income Tax Act
Section 143(1) prescribes first-level scrutiny procedures of ITRs by the Department of Income Tax. he department can make some adjustments at this stage, such as rectifying arithmetical errors and rejecting false claims based on the return’s information. After completing the rectification, the department sends an intimation to the assessee, mentioning any alterations, tax payments, or refunds.
Important Changes in the Finance Bill 2025
The new addition brings an essential feature: cross-verifying this year’s ITR with the previous year’s ITR to identify inconsistencies. That is, if inconsistencies are identified with the data reported by the current return and the returns of previous years, the department can make the same at the processing level.
For instance, where the taxpayer indicates a credit of the last year’s return but fails to support corresponding figures on the return for the current period, differences will be scrutinized more critically.
Effect on Filing of Income Tax Return
The provisions affect the taxpayers in a number of ways:
- Improved Precision Needed: Taxpayers: have to reconcile their recent ITRs with old returns. If there were any discrepancies, the tax department would rectify it and paying additional tax or lesser refund is what it implies.
- Increased Sensitivity: Since the Income Tax Department will have the facility for cross-checking details for past years, mismatches are going to be imminent, and as such caution in keeping precise books of accounts and reporting correctly will be essential.
- Likely Decrease in Notices: By preventing inconsistencies at the processing level, the amendment will decrease the number of notices issued to taxpayers, thus making compliance easier.
Preparation for the Amendments
- Maintain Detailed Records: Maintain the records of all the financial transactions reduction and credits gained in past years so that continuity is ensured for future returns.
- Check Earlier ITRs: Verify previous year returns before Income Tax return filing the current year’s return so that everything is up-to-date and inconsistencies are eliminated before it.
- Take Professional Advice: With things becoming increasingly complicated by the day, professional advice can steer through the technicalities of the new Section 143(1) and steer clear of non-compliance.
Conclusion
Amendment of Section 143(1) of the Income Tax Act, as contemplated by the Finance Bill 2025, is an indicator of the agenda of the government to streamline and enhance taxation. The amending bill aims at enabling matching of present and previous ITRs for section 143(1) of the Income Tax Department, assist in bringing anomalies at an early stage of time, minimize issuance of follow-up notices, and encourage voluntary payment of tax.
At E-startup provide end-to-end Income tax return filing services as per your specific requirements. Our streamlined process ensures your ITRs are error-free, standardized, and current with the latest amendments, for instance, Section 143(1) of the Income Tax Act. Leave the hands of e-startup and enjoy hassle-free and smooth tax compliance today.
For any further assistance or to get your doubts cleared, our experts are happy to be here to help you. Call us: 8881-069-069.
Download E-Startup Mobile App and Never miss the latest updates narrating to your business.