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Section 154 of Income Tax Act: Filing Rectification u/s 154(1)

Updated: Jan 18


Section 154 of Income Tax Act: How to File Rectification u/s 154(1)

Filing income tax is a complex process, and there is always a chance of an error during it. Such discrepancies can sharply increase your tax liability or lower your refund down the road. Fortunately, you can make an application for rectification of mistakes under section 154 of the Income Tax Act to address such concerns.

 

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Once you file your return, the IT department processes it and sends an intimation containing details of the return submitted and the numbers to the department. A mismatch happens when there is a difference between them. In this case, you may either file a rectification request or agree with the demand and pay the tax you are asked for.

In this guide, we will share everything about filing rectification under section 154 of the Income Tax Act. 


Understanding Section 154 of the Income Tax Act

Section 154 entails the rectification of errors and discrepancies related to income tax records. Further, it addresses inaccuracies in IT records due to the errors made by the assessing officer. The provision facilitates the amendment of orders issued under Sections 143(1), 200A(1), and 206CB(1). It includes notices issued before a case is scrutinized and errors in TDS and TCS statements.

Here are the features of Section 154:  

  • A notice under section 154 can be issued only by an authorized officer

  • In case a rectification increases the tax liability or reduces the refund, it is crucial to provide notice

  • An application for rectification has to be disposed of within six months the end of the month when it is received

  • Where rectification is done on its own, it can be done four years from the end of the financial year in which the rectification order is passed

  • An order that is a subject matter of revision or appeal cannot be rectified

  • Excess refund credited to the taxpayer’s account is demanded through Section 154 of the IT Act 

  • The Commissioner (Appeals) can rectify the mistake if any order is passed by him


Errors that Can be Addressed by Filing a Rectification

An apparent mistake in your Income Tax Return can be corrected by filing a rectification request under section 154(1). Here are a few instances of the errors that can be addressed by filing a rectification:

  • An arithmetic mistake

  • A clerical error

  • A factual error

  • An error due to missing out on compulsory provisions of the law

For example, you can seek correction of a mismatch in tax credit or advance tax, incorrect gender, or absence of additional details for capital gains when filing your return. You cannot use rectification requests for changing address details or bank accounts of your IT return. 


Orders that can be rectified Under Section 154

Besides rectification of errors, Section 154 can be used for addressing orders. Here are the ones that can be corrected on request or at the officer’s discretion:

  • Any order passed under provisions of the Income-tax Act

  • An intimation or deemed intimation u/s 143(1)

  • An intimation sent u/s 200A(1) in relation to TDS

  • An intimation sent u/s 206CB(1) in relation to TCS

Who can file the Rectification under section 154?