Received a 143(1) Intimation or Proposed Adjustment? What CPC Can Change, the 30-Day Window, and How to Respond

Every return filed in India is processed by the Centralised Processing Centre in Bengaluru, and every processed return produces an intimation under Section 143(1). Most taxpayers receive one each year and never read past the subject line. That is usually fine — an intimation that agrees with your return is a receipt. But two other kinds arrive under the same section number, and both have a clock attached: a proposed adjustment that gives you 30 days before the department changes your income, and an intimation with a demand that has already changed it.

This guide sets out what the CPC is actually permitted to do at this stage, the grounds on which it does it, how to read the document you have received, and the correct response to each — including the two mismatches that account for the majority of these communications: TDS credit, and tax-audit report disallowances.

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Three documents, one section number

What you received	What it means	What to do
Intimation with no demand and no refund change	The return was processed as filed.	Nothing. File it.
Communication of proposed adjustment under 143(1)(a)	The CPC intends to change your income on one of five specific grounds and is giving you 30 days to agree or disagree before it does.	Respond within the window. Silence is consent.
Intimation with a demand, or a reduced refund	The adjustment has been made — either because you did not respond, or because the CPC rejected your response, or because the change was one it can make without prior notice (a TDS-credit correction, typically).	Pay, rectify under 154, or appeal under 246A — within 30 days for an appeal.

The intimation must be issued within nine months from the end of the financial year in which the return was filed. A return filed in July 2026 can be processed until 31 December 2027. If no intimation issues in that time, the return stands as filed.

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What the CPC is allowed to change

Section 143(1)(a) is a closed list. The CPC is not conducting an assessment; it is checking the return against itself and against documents already on record. It may adjust only for:

Ground	What it catches	Typical example
(i) Arithmetical error	A total that does not add up	Chapter VI-A deductions summed wrongly
(ii) Incorrect claim apparent from the return	A claim that the return’s own information shows to be wrong — a deduction above its statutory ceiling, an inconsistency between two schedules	80C claimed at ₹1.8 lakh; rent received in Schedule HP but interest deduction exceeding the ₹2 lakh self-occupied limit
(iii) Loss claimed in a late return	Business or capital loss claimed for carry-forward in a return filed after the due date	F&O loss in a return filed in October without an audit requirement
(iv) Expenditure disallowed in the audit report but not in the return	The tax auditor’s Form 3CD reports a disallowance — under 40(a)(ia), 43B, 40A(3) — that the return did not add back	GST or PF unpaid at the due date reported in clause 26 of 3CD, but not added to income
(v) Late-return deductions	Deductions under 10AA or 80-IA to 80-IE claimed in a return filed after the due date	SEZ deduction in a late return

A sixth ground — adding income visible in Form 26AS or Form 16 that the return omitted — was removed for AY 2018-19 onwards. The CPC can no longer add unreported income through 143(1)(a). That is why AIS mismatches on property sales, stock-market income, or unreported receipts now come through the compliance portal and Section 148A instead, and why a 143(1) communication citing “income in 26AS” should be read carefully: it is more likely to concern TDS credit than income.

Anything outside these five grounds — a dispute over the nature of your income, the section you filed under, the genuineness of an expense — is not a 143(1) matter. If the department wants to examine those, the route is 143(2) scrutiny, and a CPC adjustment that strays into them is itself a ground of appeal.

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The two mismatches that account for most intimations

TDS credit

You claimed ₹1,20,000 of TDS; Form 26AS shows ₹90,000; the intimation allows ₹90,000 and raises a demand for the difference plus interest. Almost always the cause is the deductor — a return filed late, a wrong PAN, a wrong assessment year, or a deduction made but not deposited. The CPC gives credit only for what the deductor’s return shows. The fix is on the deductor’s side: get the TDS return filed or corrected, wait for 26AS to update, then file a rectification request under Section 154 on the portal under “tax credit mismatch.” Do not simply pay the demand; the tax was deducted from you once and should not be paid twice.

Audit-report disallowances

For audited businesses, ground (iv) is the workhorse. The tax auditor reports in Form 3CD every amount that the law requires to be disallowed or added back — unpaid statutory dues under 43B, payments without TDS under 40(a)(ia), cash payments above ₹10,000 under 40A(3), personal expenses, and so on. If the return does not reflect the same add-backs, the CPC proposes to add the difference. The reply is either agreement — the return was wrong and the auditor was right — or a demonstration that the auditor’s figure was itself qualified or that the amount was allowable on the facts (a 43B item paid before the due date of filing, for instance, and disclosed as such). Get the 3CD and the computation side by side before responding.

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How to respond to a proposed adjustment

You have 30 days from the date of the communication. The response is filed on the e-filing portal under Pending Actions → e-Proceedings → Respond, adjustment by adjustment, and each response is one of:

• Agree — the adjustment is correct. Pay the resulting tax through a self-assessment challan and quote it in the response. Consider whether a revised return under 139(5) is cleaner, if the window is still open.
• Disagree — with a reason and a document. The reason must engage with the specific ground cited. “Income correctly declared” is not a reason; “the ₹4,00,000 reported in clause 26 of Form 3CD was paid on 12 September, before the due date of filing, and is therefore allowable under the proviso to Section 43B — challan attached” is.
• Partially agree — where the adjustment bundles several items.

If you do not respond, the adjustment is made and the intimation issues with a demand. That is not the end — see below — but every later route is slower and more expensive than the 30-day reply.

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Once the intimation has issued

Three routes, depending on what is wrong.

Situation	Route	Time limit
The intimation contains a mistake apparent from the record — TDS credit now visible in 26AS, an arithmetical error, an adjustment the CPC was not permitted to make	Rectification under Section 154, filed online — “reprocess the return,” “tax credit mismatch,” or “return data correction”	Four years from the end of the financial year of the intimation
You disagree with the adjustment on the merits	Appeal under Section 246A to the Commissioner (Appeals) through the National Faceless Appeal Centre, in Form 35	30 days from service of the intimation
Your return was wrong and the revision window is open	Revised return under 139(5)	31 December of the assessment year, or before assessment
The demand is correct	Pay it — and check that the intimation’s interest under 234B and 234C has been computed to the right dates	30 days to avoid further interest

A demand you neither pay nor contest is recovered by set-off under Section 245 against your next refund, with an intimation of set-off that itself carries a short response window. Property-sale and stock-market taxpayers with large refunds due should watch for this in particular.

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What a 143(1) intimation cannot do

Because the section is a closed list, a great deal of what taxpayers fear from an intimation is outside its reach. The CPC cannot recharacterise your income from business to profession, cannot decide that your consultancy is a specified profession, cannot disallow an expense because it doubts the invoice, and cannot add income it found in your AIS. Any of those requires a notice under 143(2) and an assessment — with the reply, hearing, and evidence that go with it. If a 143(1) adjustment does any of these things, the appeal ground writes itself.

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Frequently asked questions

I received an intimation under 143(1) with no demand. Do I need to do anything?

No. The return has been processed as filed and the intimation is a record of that. Keep it. If a refund was due, it will follow; if it does not arrive within a few weeks, check the refund status and the bank account validation on the portal.

What is the difference between a proposed adjustment and an intimation?

A proposed adjustment is a communication before the CPC changes your income, giving you 30 days to agree or disagree. An intimation is the outcome of processing — either as filed, or after an adjustment has been made. If you received a proposed adjustment and did not respond, the intimation that follows will carry the adjustment and any demand.

My TDS credit was reduced in the intimation. Should I pay the demand?

Not before checking Form 26AS. If the deductor has not filed or has filed with a wrong PAN or year, the credit is missing from 26AS and the CPC could not allow it. Get the deductor to correct the return, wait for 26AS to update, then file a rectification request for tax credit mismatch. Paying the demand means paying tax that was already deducted from you.

Can the CPC add income from my AIS through a 143(1) adjustment?

No, not for AY 2018-19 onwards — that ground was removed. Unreported AIS income is pursued through the compliance portal and Section 148A instead. A 143(1) communication citing 26AS almost always concerns TDS credit, not income.

I missed the 30-day window. What now?

The adjustment will have been made and an intimation with a demand issued. You can still file a rectification under Section 154 if the adjustment was a mistake apparent from the record, appeal under 246A within 30 days of the intimation if you disagree on the merits, or pay if it was correct. Each of these is slower than the reply would have been, but none is foreclosed.

The intimation added back amounts from my tax audit report. Is that valid?

Yes, under ground (iv) — provided the return genuinely omitted add-backs that Form 3CD reported. Compare the 3CD clauses with your computation. If the amounts were allowable on the facts, such as 43B dues paid before the filing due date, respond with the evidence; if the return was simply wrong, agree and pay, and consider a revised return.

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Related reading

• Income Tax Notice Reply & Representation — our service
• Claimed 44AD Instead of 44ADA? What the Notice Means — and How to Reply
• Income Tax Notice for Capital Gains on Property Sale
• Stock Market or F&O Income Not Reported? The AIS Mismatch Notice
• Tax Audit under Section 44AB — our service