What is a Rectification Order?

There are many cases in which the taxpayer has filed the ITR and then later realized that they have made a few mistakes that need to be corrected. In these situations, the taxpayer can file a Rectification order under section 154 of the Income Tax Act.

Rectification is generally done after receiving intimation under section 143(1) for mistakes in the ITR. You can also check them from the available documents. In case of errors, you need to file a revised return, not a rectification of a mistake.

First, you file an ITR, which is processed by the Income Tax Department, and then they send the intimation. The intimation has all the details of your ITR. If there is a mismatch, then section 154 comes into action.

Understanding Section 154 of the Income Tax Act

• Only the authorized officer is allowed to issue a notice under section 154 of the Income Tax Act. 
• The excess amount credited to the taxpayer’s account must be demanded through Section 154 of the Income Tax Act.
• If the result of the rectification is more or less in the tax liability or a reduction of a refund, then it is necessary to provide the notice. 
• You can rectify the orders that are related to the matter of appeal or revision. 
• The application of the taxpayer for rectification should be disposed of within 6 months. The counting should start from the end of the month in which the application is received. 
• In the cases where the rectification is done on its own, these orders can take place up to 4 years, starting from the end of the financial year in which the order of rectification is passed. 
• If any of the orders is passed by the commissioner, then he is also allowed to rectify the mistake.
• If there is a demand for a higher refund than the amount you claimed and a mismatch, then you can file a rectification request, or agree with the demand and pay the required tax.

Errors that can be corrected by filing a Rectification

If there is a mistake in the Income Tax Return, then it is allowed by the Income Tax Department to file a rectification request. The following are the mistakes or errors that you can rectify by requesting rectification under section 154: 

• A small clerical error
• An arithmetic mistake
• An error of fact
• Error due to the overlooking of mandatory law provisions

Who can file the Rectification and when?

You can only request the rectification for the returns that have already been processed in CPC Bangalore. If you face that there is a change in your income in rectification, then you should file a revised ITR instead of a rectification request. Also, keep in mind that there are no exemptions or deductions allowed to be claimed by a rectification request. 

A request for rectification is filed by the person below:

• The person who is filing the Income Tax Return
• The rectification rights that are requested by the jurisdictional assessing officer.
• If the mistake appears on the face of the record, then the Income Tax Authority can also rectify it on its own.

Orders to be Rectified u/s 154

The important thing to keep in mind is that the Rectification of Income Tax Return cannot be made freely for any mistake. There is also a special process for which the Rectification process can be done. The orders that can be rectified on the request of the income tax officer are given below:

• Any order that is passed under any type of provisions of the Income Tax Act.
• Any intimation, deemed or not, under section 143(1).
• Any intimation under section 200A (1) in relation to the TDS return processing.
• Any intimation under section 206CB (1) in relation to the TCS return processing. 

Situations when Rectification Rights cannot be transferred

• If the ITR is already selected for scrutiny. 
• You should file a revised return instead of a rectification request if there is a change in income on rectification. 
• If the order is already up for revision or appeal. 

Procedure of Rectification Application

There are certain things that you should keep in mind before applying for a rectification order u/s 154:

• Recognise the presence of the mistakes and account for them correctly to make sure you file the application of rectification for the correct reasons.
• You have to make sure that the discrepancy is accurately shown in the tax records. There should not be any involvement in any form, like debate, elaboration, or investigation. 
• You can also file the rectification online, very easily. Hence, you need to make sure that you understand the whole process before going forward. 

Steps to file an online Rectification

1. Log in to the official portal for e-filing by using a valid user ID and password. 
2. Click on the option saying ‘Services’ and select the Rectification from the options.
3. Click on the ‘New Request’ tab shown on the rectification page. 
4. After reaching the New Request page, your PAN number will be auto-filled. Choose between the Income Tax and Wealth Tax. Now, select the assessment year from the menu and click on the continue button.
5. You can classify the rectification requests into the following:

5.1 Rectification of Income Tax: Reprocess the return

• Select the type of request: ‘Reprocess the Return’
• Submit the request for rectification order.
• After submitting the request, you are directed to the e-verification page.

5.2 Rectification of Income Tax: Tax Credit Mismatch Correction

• Choose the tax credit mismatch correction as the type of the request.
• The given schedules are auto-populated based on the records available in the processing of the corresponding return.
• Choose the relevant schedule and click on ‘delete’ or ‘edit’ to make the changes.
• Enter details as per the schedules and click ‘save as draft’:
  • TDS on salary details
  • TDS on other than salary details
  • TDS on transferring the immovable property
  • TCS
  • Advance tax
  • Self-assessment details
• Click on continue to submit the request. 

The generation of the reference number ensures a successful submission of your request for rectification with the Income Tax Authorities. After your request is processed successfully, you will receive your rectification order u/s 154.

In short, the process of Rectification of the Income Tax Return gives the right to you and the income tax officer to make the corrections in your ITR. 

Response to the Outstanding Demand 

After your Rectification order is filed, you have to follow the steps below to respond to the outstanding demand:

1. Go to the ‘Response to Outstanding Demand’: Open the dashboard and navigate to the tab saying ‘ Pending Actions’ and then click on the “Response to Outstanding Demand”. 

2. Select the appropriate Demand: You have to select the relevant demand that should be related to the rectification return. Then, click on the ‘Submit Response’.

3. If you agree with the Demand

• Choose ‘Demand is Correct’
• Check the disclaimer, which says you need to submit the response as the demand is correct, then you cannot disagree with it later on. 
• If you haven’t paid the amount, then choose ‘Not paid yet’ and then click ‘pay now’ to proceed to the e-pay tax page. 

4. If you have already paid

• Choose ‘yes, already paid, and challan has CIN’. 
• Enter the details of the challan:
  • Enter the type of payment: minor head
  • Amount of challan
  • BSR code
  • Serial Number of Challan
  • Payment Date
• Upload a copy of the challan in the PDF form and then click on save.

5. If you do not agree with the demand (partially or fully)

• Select the option ‘Disagree with the demand’.
• Click on ‘Add reason’ and choose ‘Rectification/Revised Return filed at CPC’.
• Enter the value of the demand for which you disagree.
• Provide the acknowledgement number for the Rectification Return. 
• Click on Submit. 

6. Confirmation

• After the submission, you will get a transaction ID. You need to save it for future reference or for communication with CPC.

Pre-Requisites to File Online Rectification Request

There are certain points that you should keep in mind to file a valid rectification request under section 154:

• The Income tax return for the relevant assessment year should have already been processed in the CPC, Bangalore.
• In case of electronic return, only the online rectification can be filed.
• To correct the tax credits, there is no need to upload an XML file. 
• The ITD must have issued the intimation under section 143(1) or 154.
• If neither of the above intimations is available, then you can request a new service intimation on the e-filing portal of Income Tax.
• If you have uploaded the wrong documents by mistake, then you can withdraw the rectification request and submit a new one by the end of the day.
• You have to be a registered user on the website of e-filing to be able to file the rectification requests.
• If there are any previous rectification requests available, then only after their processing can you file a new one.
• If the rectification rights are transferred to the Assessing Officer, then the rectification can be submitted.