Taxpayers generally meticulously plan and estimate the tax implications to ensure they file an accurate return. However, despite this, there may be an instance where the information you file may not be the same as the one with the Income Tax Department (ITD).
In such a scenario, you can request a rectification under Section 154 of the Income Tax Act. However, this has to be as per the provisions mentioned in the section.
Read on to learn more about Section 154 of the Income Tax Act, its nuances, and how to file for rectification under it.
Once the Income Tax Department processes the return you file, you will receive an intimation that contains the details you submitted and the information present with the ITD. For such instances, the Income Tax Act has a special section – Section 154.
Section 154 of the Income Tax Act allows taxpayers to rectify mistakes which are evident from the tax records. A few examples of errors that you can rectify include a mismatch in advance tax figures, arithmetic mistakes, or discrepancies in tax credit figures.
You can also rectify the details regarding capital gains missed during ITR filing, errors due to slip-ups regarding the compulsory provision of law, and more.
You can apply for rectification under Section 154 of the Income Tax Act only for returns already processed by the Centralised Processing Centre (CPC). If, upon rectification, there is a change in your reported income figures, you need to file a revised ITR and not a rectification.
Rectification orders can be passed for up to 4 years post the end of the assessment year in question. However, 4 years will be from the end of the financial year in which you apply for rectification, not from the year of original filing.
In case an order is set aside or revised, the 4 years will be from the fresh order date instead of the original order’s date. The concerned authority has a time limit of 6 months from the receipt of your rectification appeal to either amend such an order or deny your claim.
There are a few things you must keep in mind while applying for rectification of discrepancies under Section 154 of the Income Tax Act. These are as follows:
If, upon rectification, there is an increase in exemptions or a reduction in tax liabilities, you are obligated to receive a tax refund from the IT Department
If your tax refund has already been credited, yet post rectification, the sum approved for refund decreases, and you have to repay the excess refund received
When the Commissioner passes an order, it can be rectified either upon your application or as independent actions of the concerned authorities
The easiest way to avoid the need for rectification is to double-check all your documents and remain highly alert while filing your ITR. Investing in tax-saving investments and maintaining updated income and capital gains records are extremely useful to help streamline tax planning.
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You can revise your filed ITR before the due date stated by the I-T Department. Generally, the due date is 31st December of the assessment year. You can revise mistakes such as the submission of incorrect details related to income, address or bank account.
On the other hand, a rectification can be filed under Section 154 of the Income Tax Act only after you receive an intimation from the CPC. Here, you can rectify clerical errors, factual errors, mistakes in entering gender, and other errors as stipulated in the section.
The last date for the submission of revised returns is always 31st December of the relevant tax assessment year. For example, for FY 2023-24, the last date is 31st December 2024.
However, rectification orders can be passed until the end of FY 2027-28, according to Section 154 of the Income Tax Act.
To file a rectification online under Section 154 of the Income Tax Act, log in to the income tax e-filing website. Then, go to ‘Services’ in the main menu and click on ‘Rectification’ in the dropdown list.
Next, click on ‘New Request’ and select ‘Order Passed Under’ as ‘Income Tax’. Finally, select the relevant assessment year for which you want to file a rectification and click ‘Continue.’ Then, choose the rectification type and enter the details as required.
You can file a second rectification request under Section 154 of the Income Tax Act only after the one submitted first is processed by the CPC. Moreover, you cannot withdraw rectification requests once submitted.