Everything You Need to Know About Section 154 Rectification

Despite thorough planning, discrepancies may arise between your filing and Income Tax Department records. This may prompt an intimation from the Central Processing Centre (CPC).

Upon receipt, request rectification under Section 154 of the Income Tax Act, 1961.This provision allows correction of errors like advance tax mismatches, arithmetic mistakes, and capital gains details omission.

When Can Taxpayers File a Rectification

You can apply for rectification under Section 154 of the Income Tax Act only for returns already processed by CPC. If there is a change in your reported income figures due to rectification, you need to file a revised ITR.

Rectification orders valid for up to 4 years after the end of the assessment year
Time limit calculated from the financial year of the rectification application, not original filing
If an order is set aside or revised, 4 years calculated from the fresh order date
Authority must respond to a rectification appeal within 6 months of receipt, amending or denying the claim

Things to Consider While Applying for Rectification

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:

If there is an increase in exemptions or a reduction in tax liabilities after rectification, you are obligated to receive a refund
If your refund has been credited but the sum decreases after rectification, 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 information while filing your ITR. Investing in tax-saving investments and maintaining updated income and capital gains records are extremely useful to streamline tax planning.

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How are tax rectification and revised returns different?

Revised returns allow correction before the Income Tax Department's due date, typically December 31st of the assessment year. Mistakes in income, address, or bank details can be amended.

Rectification, under Section 154, occurs after receiving an intimation from the Central Processing Centre (CPC). It addresses clerical, factual, and gender-related errors as specified.

What is the last date for the submission of revised returns?

The last date for the submission of revised returns is generally 31st December of the relevant tax assessment year.

How can one file a rectification online?

To file an online rectification under Section 154, 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 ‘Income Tax’ under ‘Order Passed Under’. Then, 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.

Is it possible to file a rectification twice?

You can file a second rectification request under Section 154 of the Income Tax Act only after the first one is processed by the CPC. Moreover, you cannot withdraw rectification requests once submitted.

What is the time limit for an order of rectification under Sec 154?

Authorities can issue the order only up to four years from the end of the assessment year. This is in accordance with the provisions of the section.

How do I check my rectification status?

You can check the status of your rectification under Section 154 through the e-filing portal. Use the reference number (15-digit) given via mail or SMS after you submit the request.

Who can apply for rectification under Section 154?

Rectification requests can be placed only by those who receive the order or notice from CPC. This includes registered taxpayers, e-Return Intermediaries (ERIs), and authorised representatives and signatories. In some cases, the Income Tax Authority can rectify the return provided the error appears on the face of the record.