Decode CPC Adjustment Codes: TDS Denied, 234B Interest and Rounding in 143(1)
Five adjustments cause most 143(1) demands: TDS credit denied on a 26AS mismatch, 234B interest for advance-tax shortfall, loss carry-forward disallowed under s.80, rounding differences, and 80C/80D disallowed on a Form 16 mismatch — each has a specific remedy, from AIS feedback to rectification.
Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Five adjustments produce the overwhelming majority of s.143(1) demands from the Income-tax Act, 1961: TDS credit denied on a 26AS/AIS mismatch, 234B interest added for an advance-tax shortfall, a carried-forward loss disallowed because the return was filed late (s.80), rounding differences, and an 80C/80D deduction disallowed because it did not reconcile with the Form 16 data the CPC holds. Each code has a specific cause and a specific remedy — and the right remedy depends on whether the error is yours or the CPC's. Decode the adjustment first; pay second.
The five common adjustments — cause and remedy
The intimation displays each adjustment with a description in the "adjustment details" section. The labels below describe the adjustments by their substance; the exact code strings shown on your intimation may differ. on the current code format for your assessment year.
TDS denied: the most common, and the most fixable
A TDS mismatch is usually not a wrong claim at all — it is a timing or data gap. The credit you claimed exists, but the department's ledger does not yet show it. Before you do anything:
- Open Form 26AS and the AIS; find the specific TDS line.
- Check whether it is a late posting (deductor filed the TDS statement after you filed) — the most common cause.
- Check the PAN and section code — a wrong PAN or a wrong section (e.g., 194S filed under 194-IA) blocks the credit.
- If the entry is genuinely not yours, raise AIS feedback marking it incorrect.
- If the credit is yours but posted late, file a rectification u/s 154 after it appears.
The AIS is informational; the credit that counts is what 26AS shows. Claim only what reconciles, and document the rest.
234B interest: verify before you pay
Section 234B charges 1% per month (or part) on the shortfall from 1 April of the assessment year if your advance tax fell below 90% of the assessed tax. It is correct in two situations — you skipped advance tax, or your self-assessment was too low. It is wrong in one: you did pay advance tax and the CPC did not credit it. If you have the challans, that is a s.154 rectification, not a payment.
Loss carry-forward disallowed: the one you cannot fix
If the return was filed after the due date under s.139(1), s.80 bars the carry-forward of losses — business, capital, and other-source losses are all lost. There is no remedy at the 143(1) stage for a late-filed return; the loss is statutory. The adjustment is only avoidable by filing on time, which makes the AY 2026-27 due date (31 July 2027, or the extended date) the controlling deadline for anyone with a loss to carry.
Changed FY 2025-26: No change to the s.143(1) adjustment categories this year. What changed is data reach — AIS and SFT information now feeds more adjustments automatically, so TDS-mismatch and deduction-denial lines are driven by the same third-party data you can see on the portal. Check it before you respond.
Worked example: Sarika's three-line intimation
Persona: Sarika, salaried, files ITR-1 for AY 2026-27. Her intimation shows three adjustments:
- TDS denied — ₹6,000. She claimed ₹1,26,000 TDS; 26AS shows ₹1,20,000. Cause: her employer's March-quarter TDS posted after she filed.
- 234B interest — ₹1,120. Computed on a ₹80,000 shortfall in self-assessment.
- Rounding — ₹2. Trivial.
Step 1 — TDS line. Sarika opens 26AS, finds the ₹6,000 posted in May. It is hers. She files a rectification u/s 154 with the 26AS extract; the ₹6,000 credit is restored.
Step 2 — 234B line. She checks her bank challans. She actually paid ₹90,000 as advance tax in March — the full ₹80,000 shortfall plus more — but the CPC applied only part of it. She attaches the challan to the same rectification. The ₹1,120 is re-computed.
Step 3 — Rounding. The ₹2 she pays; it closes the demand.
Net result: the ₹6,000 TDS is restored and the 234B is reduced — a ₹7,120 swing fixed by one s.154 rectification, not by paying the demand as raised. on the evidence the CPC requires for a s.154 TDS restoration.
See Also
Frequently Asked Questions
What does CPC adjustment code 143(1) mean?
Section 143(1) is the initial processing of your ITR by the CPC. The CPC compares your return against AIS/26AS data and makes automated adjustments for discrepancies.
Why did the CPC add interest under Section 234B?
Section 234B interest is charged when total advance tax paid is less than 90% of the assessed tax. If the CPC found that your advance tax payments did not meet the 90% threshold, it automatically adds interest.
Can I contest a CPC adjustment?
Yes. You can file a response on the e-filing portal. If the adjustment is incorrect, provide documentation. You can also seek rectification under s.154.
What is the difference between Section 143(1) and Section 148?
Section 143(1) is the automated initial processing of your ITR by the CPC. The CPC compares your return against AIS/26AS data and makes adjustments for discrepancies such as TDS mismatches, advance-tax shortfalls, and disallowed deductions. Section 148, by contrast, is a reassessment notice issued by an Assessing Officer where income is believed to have escaped assessment — a separate proceeding with its own timelines and response requirements, not automated CPC processing.
Is there a fee for responding to a defective notice?
Per s.288B, a fee of ₹10,000 applies for failure to comply with certain notices. However, responding to a s.143(1) intimation within the time limit avoids this.
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