Income tax department to compare your last year ITR with current year’s ITR for any irregularities: How taxpayers will be impacted?

Income Tax Department has also released the FAQs on the same.

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As per the FAQs issued, “Section 143(1) has been amended to provide for checking any inconsistency in the return with respect to the information in the return of any preceding previous year, as may be prescribed.” The FAQ further added that these inconsistencies are yet to be prescribed. However, an example could be where a taxpayer has made a claim of any credit in a previous return, but the corresponding figures are not the same in the current return.

What is Section 143(1) of the Income Tax Act?

Section 143(1) deals with the processing of income tax returns after it is submitted and verified by the taxpayer. Currently, the income tax department checks for arithmetical errors in the return or incorrect claims in the return apparent from any information in the return.

How Section 143(1) amendment will impact taxpayers

According to tax experts, the new proposed amendment focuses on ensuring that any mismatch between the previous year’s ITR and current ITR is dealt with at the time of processing of ITR and does not lead to sending of income tax notices to taxpayers.

Naveen Wadhwa, Vice President-Research at Taxmann.com, says, “The Income Tax Department will clarify the inconsistencies and irregularities that will be checked with the previous year’s ITR. However, it is expected to cover any data furnished in the previous years and the current year’s ITR. This may