Rectification of Income Tax Return u/s 154
Comprehensive understanding of rectification of ITR - Meaning, process, time limit
What if you found some material corrections are needed after filing ITR?? In case you want to make some changes in the return then rectification of return u/s 154(1) is one of the ways out. Rectification is normally done after receiving intimation u/s 143(1) for mistakes which you can apparently notice from the available documents. But, if there is error or omission then revision of ITR is required and not rectification.
Lets understand the procedure and various aspects related with rectification in detail.
Grounds necessary for requesting rectification to the Income Tax Department
As mentioned above, only on some specific grounds rectification is requested. These grounds are normally termed as “mistake apparent from records”. If we interpret the phrase in a layman language we can develop an understanding that those mistakes can be rectified which are traceable from documentary records. These records are normally the supporting based on which we filed our ITR such as form 16, form 26AS, income statements, deduction proofs, notifications or pronouncements made by IT department etc. Till date law has not prescribed any list. But professionals could conclude some pointers such as:
- Any provision of law becomes effective from retrospective date
- Mathematical and clerical mistakes
- Decision of jurisdictional high court not followed while considering this particular case
- Wrong application of any provisions of the Income Tax Act (by any means i.e. overlooking any provision, misinterpretation etc)
- Not giving the credit of TDS / Taxes as per Form 26AS
- Any factual errors
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 income tax officer as per section 154
- a) Any order passed under any provisions of the Income-tax Act
- b) Any intimation or deemed intimation under section 143(1)
- c) Any intimation sent under section 200A(1) in relation to processing of TDS return
- d) Any intimation under section 206CB(1) in relation to processing of TCS return
“Return processed at CPC can only be Rectified. Even if it is a belated return.”
Rectification of an order which was subjected to appeal or revision
Rectification u/s 154 can be done for any matter which 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.
i) Certain expenses of Rs. 1,00,000 were disallowed
ii) Addition u/s 43B made for Rs 1,25,000 as proof of payment was not furnished
Now, following are the current position of 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 appellate authority hence, no rectification request can be admitted in such a scenario.
The process of making the online rectification request under section 154 to IT Department
The power to seek rectification is mutual. Which means, it can also be exercised by an IT officer if he finds the necessity of corrections in his decision made. You can easily raise an online request for rectification by following the simple series of steps as mentioned below :
A. Login to www.incometaxindiaefiling.gov.in
B. From the drop down “Efile” select “Rectification”
C. Mention the credentials asked like
Order or intimation to be rectified - Select between Income Tax or Wealth Tax from the drop down menu
- Assessment Year
D. Select the rectification request type
There are four types of request from which you can choose
- Tax Credit mismatch correction only
By selecting this option you can make multiple corrections (Maximum of 10 sub categories at a time) in Income Tax amount, TDS (Tax Deduction at source) amount and TCS (Tax Collection at source) amount you specified in Income Tax Return.
- Return data Correction (XML)
Choose reasons(max. 4 can be selected and schedules for which you are requesting rectification.You need to upload xml for the changes desired.
- Only Reprocess the return
Through choosing this option you can request to reconsider the areas of Tax credit mismatch or 26AS details. No xml to be uploaded in this case.
- Additional Information for 234C
Need to fill here the details as asked in the columns
- Tax Credit mismatch correction only
E. Click on submit below the screen. Next select OK on pop up asking for confirmation that your TDS entries are in sync with 26AS
F. A reference number is generated followed by successful submission of request.
Generation of reference number ensures 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.
In nutshell, the Rectification of income tax return gives you and the income tax officer the same right to make corrections in return. You cannot seek corrections after 4 years from the end of the financial year (from passing of order sought to be rectified).
Pre-Requisites to file online Rectification Request U/s 154
For filing a valid Rectification Request u/s 154 following pointers should be adhered to
- The Income Tax Return corresponding to the relevant Assessment Year should have been processed.
- Income Tax Department must have issued either intimation u/s 143(1)/154.
- In case, Intimation u/s 143(1)/154 is not available with you, then you can apply for new service request for intimation on efiling website.
- In case you have mistakenly submitted/uploaded wrong documents, you can withdraw your rectification request within end of the day of request . And, submit a new rectification request.
- Submission of Rectification can be done also in cases where rectification rights transferred to AO
- Only online rectification can be filed in the case of electronic returns.
- You can file a rectification request only if previous rectification request is processed (if any)
- You need not upload XML file in case you are correcting Tax Credits.
- You should be a registered user on an efiling portal to file rectification request.
- In case the refund has been adjusted against the demand of other Assessment Years. In such a case, if problems are related to the other assessment year then, rectification requests should be filed for the other assessment years i.e., demand year and not for the current year.
Example : For F.Y.2018-19, in which refund amounting Rs.45,000/- was arising. However, there was a demand pending for F.Y. 2014-15 amounting to Rs. 15,000 due to TDS not reflecting in 26AS but now Form 26AS is updated.
While return for F.Y. 2018-19 was processed, CPC adjusted demand of Rs. 15,000 for F.Y. 2014-15 with refund of F.Y. 2018-19 and net amount of refund issued Rs. 30,000/- Now in this case, a rectification request should be filed for F.Y. 2014-15.
Frequently Asked Questions
Q- What is the time limit for rectification under section 154?
Assessee can file rectification within 4 years from the end of the financial year in which order sought to be amended was passed. Order sought to be amended does not necessarily mean the original order. It could be any order including the amended or rectified order
Q- How can I rectify my income tax return after e verification?
Taxpayer can file his Revise Return within the time limit to rectify the error in return.
Q- How do I withdraw a rectification request?
Taxpayer can withdraw the rectification request within the end of the day of request.
Q- How do we raise a rectification request for Tax credit mismatch?
It can be done by making a login into the income tax site and selecting the income tax credit mismatch under ‘Rectification’ in ‘e-file’ tab and then filling in the required details as explained above.
Q- Is it possible to change the assessment year in ITR (already verified and got intimation)?
No, this cannot be done now as filing revised return for previous years is not permitted under the law.
Q- Can an appeal be filed with CIT after a rectification return?
Yes, an appeal can be filed against rectification order.
Q- I got an excess income tax refund credited to my bank. I filed a revised return. But before processing it, I got an excess refund in my bank account. What should I do?
Either pay the excess refund amount at the time of filing revised return and enter the challan details while filing revised return. Alternatively, after processing of revised return, there will be an outstanding demand for the amount of excess refund in Intimation u/s 143(1) for the revised return and you need to pay the same later on receipt of Intimation.
Q- What is the process to intimate tax department if tax refund is less than claimed in ITR?
If you have received less refund, then while processing the return,the income tax department may have some outstanding demand which is intimated through intimation under 143(1). To review this login to your income tax portal> My Account>Tax credit mismatch. If you agree, then select agree and if not you have to provide reasons for the same.
Q- I’m getting an invalid CPC communication reference number while filing rectification for income tax return. What should I do?
Communication reference no. auto-populates after selection of the year for which rectification is to be filed. Also, it can be traced from the order/ intimation received for which rectification is to be filed
Q- How do I pay outstanding demand on 154?
Tax Demand can be paid via Challan 280. This challan can be filled online from TIN-NSDL website and demand can be paid via online banking / debit card etc.
Q- What is the time limit for rectification under section 154?
Rectification can be made upto 4 years from the end of the financial year in which order sought to be rectified was passed. Suppose the order for which you want to submit rectification request was issued in the Financial Year 2015-16 then you can submit rectification request u/s154 till 4 years i.e. till 31st March 2020.
Q- What is intimation under Section 154?
Sometimes there may be a mistake in any order passed by the Assessing Officer. In such a situation, mistakes which are apparent from the record can be rectified under section 154.
Q- How do you file rectification?
Rectification can be filed online after making a login on your income tax India e-filing account. For the step by step process please refer above.
Q- What is the difference between revised return and rectification return?
Revised return can be filed before completion of assessment or before the end of the respective assessment year whichever is earlier. However, rectification can be filed after processing of return or after receiving intimation u/s 143(1).In case of filing rectification against order then it can be filed upto 4 years from the end of the financial year in which order sought to be amended was passed.
Q- Can appeal be filed against intimation u/s 143 (1)?
Yes, appeal can be filed against the intimation u/s 143 (1) before the CIT(A).
Q- Is the Latest communication reference number required for submitting rectification u/s 154?
There is no requirement to quote the communication reference number for submitting rectification request u/s 154 online as per the new changes as the latest communication reference number auto-populates.
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