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Section 154 of the Income Tax Act: Rectification of errors in tax return

Section 154 of the Income Tax Act allows income tax authorities to rectify any mistake apparent from the record. The rectification of errors can be made to amend any order passed by the IT authority or to amend intimations sent under any of the following sections:

  • Section 143(1)
  • Section 200A(1)
  • Section 206CB

What kind of errors can be rectified under this section?
Errors apparent from the record, which do not require any investigation, debate, or elaboration, can be rectified. Apparent mistakes include inaccuracies of fact, arithmetical mistakes, clerical errors, and instances when compulsory provisions of the law have been overlooked.

Who can file for rectification under section 154?
The income tax authority can rectify the mistake suo moto, meaning by themselves. Alternatively, the assessee, the deductor, or the collector can make an application for correcting the mistake. If the authority concerned is the Income Tax Commissioner (Appeals), then the Assessing Officer can also make an application for rectification under section 154.

Is there a time limit for rectification of errors under this section?
Under sub-section 7 of section 154, the order for rectification must be passed within 4 years from the end of the financial year in which the notice or order that needs rectification was issued. For example, if the original order was issued in January 2012, then the rectification order needs to be passed by 31st March 2016 (i.e. 4 years from the end of FY 2011-12). In case the order was revised or set aside, the period of 4 years will be calculated from the date of the revised order.
  Additionally, under sub-section 8 of section 154, when the assessee applies to the IT authority for rectification, the authority should either accept the rectification and make the amendment or refuse to allow the claim within 6 months from the end of the month in which the application is received.

How can the assessee file for rectification of errors under section 154?
If you wish to file an application for rectification under section 154, you need to follow these steps.
1. Log in to your account on the income tax e-filing website.
2. Click on the e-file option in the header menu and select rectification.
3. Enter your PAN, select the order/intimation to be verified (in this case, Income Tax), and pick the assessment year from the drop-down menu.
4. You’ll be taken to a page that contains details of your PAN, ITR, financial year, assessment year, the latest intimation number issued, the e-filing acknowledgement number, and a drop-down to select the request type. Make your selection here. You have 4 options, as follows:
1. Tax credit mismatch correction only
2. Return data correction (XML)
3. Only reprocess the return
4. Additional information for 234C

  • If you choose the first option, a list with options like TDS, TCS, and IT details appears. Click the right item and submit.
  • If you choose the second option, you need to download the latest utility and generate XML with the filing type selected as “rectification.”
  • If you choose only to reprocess the return, you can check your 26AS for any tax credit mismatch before submitting.
  • Lastly, if you choose to add information for 234C, you’ll need to fill in details about the nature of income under various sections before submitting.
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