Know all about Rectification under Section 154(1) and Section 154. Before filing an application for the rectification, read the following instructions. Read more to correct the mistake that appeared in the Intimation received under section 143(1).
Rectification under Section 154 (1)
If there is a mistake in your Income Tax Return, a rectification under section 154(1) is allowed by the IT Department for correcting mistakes.
- Errors that can be rectified under section 154(1) are an arithmetic mistake, an error of fact, or error due to overlooking compulsory provisions of law or a small clerical error. For example, Advance Tax mismatch, A mismatch in tax credit, additional details not submitted for capital gains at the time of filing return or gender mentioned incorrectly.
- A Taxpayer can file rectification, or an Income Tax Authority can rectify an apparent mistake on its own.
- If there is a change in Income during the rectification of a ‘mistake’, then a rectification should not be filed. In such case, a Revised Income Tax Return must be filed. In the rectification request, no new exemptions or deductions are allowed to be claimed.
- A rectification request u/s 154(1) can be filed for the IT Returns which are already processed in CPC, Bangalore.
- If the Income Tax return is filed online, then Online Rectification is only allowed.
- You should not use this rectification request for changing address details of your Income Tax Return or bank account.
How to file Online Rectification under Section 154(1)?
Step 1: Login to Income Tax E-Filing Portal using User ID & Password and GO TO ‘My Account’, ‘Rectification Request.’
Step 2: From the drop-down, select the Assessment Year for which Online Rectification to be filed and enter Latest Communication Reference Number (As mentioned in the CPC Order) and latest CPC Order Passed Date (As referred to in the CPC Order). Use latest order number if you have received more than 2 orders.
Step 3: Select the “Rectification Request Type”:
Tax Payer correcting Data for Tax Credit Mismatch only:
- On selecting this option, three check boxes TDS, TDS, and IT will be displayed.
- You can select the check box for which the data needs to be corrected.
- Based on the selection, the fields of TDS, TCS, and IT are displayed.
- You can add a maximum of 10 entries for each of the selections.
- No need to upload an IT Return (XML).
Tax Payer is correcting the data in Rectification:
- Assessee needs to select the reason for seeking Rectification, Schedules being Changed, Donation & details regarding Capital Gains and DSC (Digital Signature Certificate), if available and applicable.
- You can select a maximum of 4 reasons.
No further Data Correction required, Reprocess the Case:
- On selecting this, three check-boxes, Tax Credit mismatch, Gender mismatch, Tax/ Interest mismatch are displayed.
- Select the Check box for which reprocessing is required.
- No need to upload an IT Return (XML).
Step 4: Click on ‘Submit’ button.
Step 5: On successful completion, an acknowledgement number is generated and then sent for processing to CPC, Bangalore.
Rectification under Section 154
It has now become a standard practice for the IT department to send an Intimation under section 143(1) to the taxpayer after he has duly filed his return for a particular AY (assessment year). Many times, the tax liability as determined by the taxpayer in his/her income tax return differs from the tax liability determined by the income tax department. This results in a tax demand or reduced refund amount being made liable to the assessee. Sometimes due to the basic processing errors committed by the CPC, Bangalore additional tax demands are issued to the taxpayer. The solution to such problems mentioned above is to file a rectification under section 154.
If there is a mistake in any order passed by the AO (Assessing Officer) which is apparent from the record can be rectified under section 154. The Income Tax Authority can rectify the mistake on its own. You can intimate the mistake to the IT authority by making an application to rectify the mistake. If the order is passed by the Commissioner (Appeals), then he can rectify the mistake which has been brought to notice by the taxpayer or by the AO (Assessing Officer).
Order of rectification can’t be passed after the expiry of 4 years from the end of the FY (financial year) in which order sought to be rectified was passed. If the taxpayer has filed an application for rectification, then the Income Tax Authority shall ‘amend the order’ or ‘refuse to allow the claim within Six months from the end of the month in which the application is received by the IT authority’.
Order which can be rectified u/s 154
An income-tax authority may,
- Amend any order passed under any provisions of the IT Act.
- Amend any deemed intimation or Intimation sent under Section 143(1).
- Amend any intimation sent u/s 200A(1) [section 200A deals with processing of statements of TDS return].
- Amend any intimation under section 206CB.
What are the Steps to be followed for making an application for rectification u/s 154?
- The assessee should study the order carefully against which he/she wants to file the application for rectification.
- Many times the taxpayer may feel that there is a mistake in the order passed by the IT Department. But sometimes, the taxpayer’s calculations could be incorrect and the CPC might have corrected these mistakes. For example, the taxpayer may have computed incorrect interest in the Income Tax return and in the intimation the interest might have been computed correctly.
- To avoid such cases, the taxpayer should carefully study the order and should confirm the existence of a mistake in the intimation.
- If you found any mistake in the order, then only you should file the application for rectification under Section 154.
- You should confirm that the mistake is the one which is apparent (clearly visible) from the records and it is not a mistake which requires elaboration, debate, investigation, etc.
- You can file the application for rectification through online. Before filing, once check the instructions provided in the official website https://incometaxindiaefiling.gov.in/.