Once you file an income tax return, the income tax department processes it and sends an intimation. The intimation contains details of the return you submitted and the department’s numbers.
If there is a mismatch, i.e. a demand or higher refund than what you had claimed in the return, you can do the following:
- File a rectification request
- Agree with the demand and pay the tax.
What is Section 154?
- Only an authorized officer can issue a notice under section 154 of Income Tax Act.
- If such a rectification results in an increase or decrease in the tax liability or a reduction of refund, then it becomes important to provide notice.
- Excess refund credited to the account of the taxpayer shall be demanded through Section 154 of income tax.
- The taxpayer’s application for rectification should be disposed off within 6 months of the end of the month in which the application is received.
- Where rectification is done on its own, then such rectification can take place up to four years from the end of the FY in which the rectification order is passed.
- Any order which is a subject matter of appeal or revision cannot be rectified.
- If any order is passed by the Commissioner (Appeals), then he too can rectify the mistake.
What Errors Can Be Corrected By Filing Rectification?
A rectification request under section 154(1) is allowed by the income tax department for correcting mistakes when there is an apparent mistake in your Income Tax Return. The following errors can be taken care of by filing a rectification:
- An error of fact
- An arithmetic mistake
- A small clerical error
- An error due to overlooking compulsory provisions of law.
When and Who Can File the Rectification?
A rectification request can only be filed for returns that are already processed in CPC Bangalore. If there is a change in the income upon rectification, instead of a rectification request, a revised ITR should be filed. Also, no new deductions or exemptions are allowed to be claimed.
A rectification request can be filed by a person –
- Who is filing the return
- The Income Tax Authority can also rectify a mistake on its own if it appears on the face of the record.
Orders Which can be Rectified u/s 154
The key lies in the fact that rectification cannot be made freely for any mistake. Also, there is a specified process through which rectification can be resorted to. The following orders can be rectified on request or on the discretion of the income tax officer as per section 154
- Any order passed under any provisions of the Income-tax Act
- Any intimation or deemed intimation under section 143(1)
- Any intimation sent under section 200A(1) in relation to the processing of TDS return
- Any intimation under section 206CB(1) in relation to the processing of TCS return
How to File a Rectification Online?
- log in to the e-filing portal with a valid user ID and password.
- Click on the ‘Services’ drop-down and select Rectification from it.
- Click on ‘New request’ on the rectification page.
- a. Once on the ‘New Request’ page, your PAN number gets auto-filled. Now, you have to select between wealth tax and Income Tax.
b. Select assessment year from the drop-down menu and click ‘continue.’ - The rectification requests can be classified as follows –
Income Tax Rectification Reprocess the return Tax credit mismatch correction Additional information for 234C interest Status Correction Exemption section correction Return data correction (Offline) Return data correction (Online) Wealth Tax Rectification Reprocess the Return Tax Credit Mismatch Correction Return Data Correction (XML)
5.1 Income Tax Rectification – Reprocess the Return
- Select Reprocess the return as the request type.
- Submit the rectification request.
- On submitting the request, you are taken to the e-verification page.
5.2 Income Tax Rectification – Tax Credit Mismatch Correction
- Select tax credit mismatch correction as the request type
- The schedules are auto-populated based on the records available in the corresponding processed return.
- Select the schedule and click on ‘edit’ or ‘delete’ to make changes.
- Enter details in these schedules – TDS on salary details, TDS on other than salary details, TDS on transferring immovable property, TCS, self-assessment details, or advance tax. Click ‘save as draft.’
- Click Continue to submit the request.
Generation of reference number ensures the successful submission of your rectification request with the IT Authorities. Order under section 154 will be received by you after the request is processed successfully.
FAQs
Should Rectification Be Filed Online?
For all e-filed returns, the rectification return is to be submitted online from the income tax portal.
Rectification of an Order Which was Subjected to Appeal or Revision?
Rectification u/s 154 can be done for any matter that is not considered and decided in appeal/ revision. Further, any matter which has already been considered and decided in any proceedings by way of appeal or revision, the rectification of such matter is not possible under section 154.
Example:
Suppose the A.O.(Assessing officer) has made the following adjustments to the returned income of PQR Ltd.
- Certain expenses of Rs. 1,00,000 were disallowed.
- Addition u/s 43B made for Rs 1,25,000 as proof of payment was not furnished.
Now, the following is the current position of the assessee, i.e., PQR Ltd.
- The assessee has already filed an appeal against the first matter of disallowing Rs 1,00,000 expenditure, and the appeal is decided against the assessee.
On submitting the rectification application, the Assessing Officer rejected the same, giving reasoning that this particular case has already been decided by the appellate authority; hence, no rectification request can be admitted in such a scenario.