Section 154 Of Income Tax Act: How To File Rectification Under Section 154(1)?

Once you file an income tax return, the income tax department processes it and sends an intimation. The intimation contains details of the return you submitted and the department's numbers.

If there is a mismatch, i.e. a demand or higher refund than what you had claimed in the return, you can do the following:

• File a rectification request 
• Agree with the demand and pay the tax.

What Errors Can Be Corrected By Filing Rectification?

A rectification request under section 154(1) is allowed by the income tax department for correcting mistakes when there is an apparent mistake in your Income Tax Return. The following errors can be taken care of by filing a rectification:

• An error of fact
• An arithmetic mistake
• A small clerical error
• An error due to overlooking compulsory provisions of law.

Here are some examples of these errors:

• A mismatch in tax credit
• Advance tax challan details mismatch
• Gender is mentioned incorrectly.
• Additional details were not submitted for capital gains at the time of filing the return.

Do not use rectification requests for changing bank account or address details of your income tax return.

When Can Rectification Be Filed?

A rectification request can be filed only for returns which are already processed in CPC, Bangalore. If on rectifying a ‘mistake’ there is a change in Income – a rectification should not be filed. In this case, a Revised Income Tax Return should be filed. In the rectification return, no new deductions or exemptions are allowed to be claimed.

Who Can File Rectification?

A return can be rectified by

• The person filing the return.
• An income tax authority can rectify a mistake that appears on the face of the record alone.

Should Rectification Be Filed Online?

For all e-filed returns, the rectification return is to be submitted online from the income tax portal.

How To File Rectification Online?

Here is a step-by-step guide on how to file a rectification request under section 154(1) –

Step 1 – Login to Income Tax Website

Step 2 - Go to ‘Services’ in the main menu and click on ‘Rectification’ in the dropdown menu.

Step 3- Click on the ‘New Request’ button.

Step 4 – Now select ‘Order passed under’ as ‘Income Tax’. Select the relevant assessment year from the dropdown for which rectification is to be filed and continue.

Rectification Type 1- Reprocess Return

Step 5(1)- Select the request type as ‘Reprocess the Return’.

You just need to submit the request for reprocessing.

After submission of the same, you will be redirected to the e-verification page.

Rectification type 2- Tax Credit Mismatch

Step 5(2)- Select the ‘Request Type’ as ‘Tax Credit Mismatch Correction’.

It will auto-populate schedules that are available in the processed return. It allows you to edit or delete the schedule details.

You can edit the details of the below schedules:

• Tax Deducted at Source (TDS) on Salary Details,
• Tax Deducted at Source (TDS) on Other than Salary Details,
• Tax Deducted at Source (TDS) on Transfer of Immovable Property/Rent,
• Tax Collected at Source (TCS),
• Advance Tax or Self Assessment Tax Details.

Next click on the ‘Continue’ button and e-verify.

Rectification type 3- Return Data Correction (Offline)/Rectify Return via Return Data Correction XML/JSON

You can rectify the return by uploading the rectification XML/JSON file by this option.

Please note that you can submit a rectified JSON only for activities mentioned below:

• To correct email ID or mobile number or address.
• Correct the TAN or assessment year, challan number or BSR code in ‘Schedule TDS’ or ‘Taxes Paid’.
• To correct the bank account number or IFS code in bank details.
• Correct any other detail in the return that does not result in a change in the gross total income or total income or result in an excess refund claim when compared with the return already submitted.

You cannot submit a rectification return for the following activities.

• To report Chapter VI deductions which were left out in the return already filed. 
• To claim loss in the rectification return which was missed out in the already filed return.
• You cannot claim additional TDS credit or claim a missed out tax payment challan and claim the tax credit/refund. 

No need to re-enter all the entries into the latest offline utility. Here, you will be able to download the JSON file of the last filed return, which can be imported into the government’s IT Utility. Only make the necessary corrections.

Validate the XML/JSON and re-upload rectified XML/JSON. 
The process to generate a rectification XML/JSON file is the same as that of the regular return XML/JSON file.

Mention the reason for seeking rectification in return. After giving the reason for rectification and uploading the XML/JSON file, click on the ‘Submit’ button.

Download the ARN copy for future reference.

On successful submission, you will be taken to the e-verification page.

Response To Outstanding Demand If Rectification Return Is Filed

After submitting the rectification JSON, Click on ‘Response to Outstanding Demand’ from the ‘Pending Actions’ tab in the dashboard.

Select the demand for which you have submitted a rectification return and click on ‘Submit Response’.

If you agree with the demand, select the ‘Demand is Correct’ option and the disclaimer ‘Once you submit the response as Demand is correct, then you cannot Disagree with Demand later on’

Once you select these two fields, then select ‘Not paid yet’ option and click ‘Pay Now’. You will be taken to the e-Pay Tax page where you can make the outstanding tax payment.

In case you have already paid the amount, then you can select ‘Yes Already paid and Challan has CIN’ and then Add Challan Details. While adding the challan details, select ‘Type of Payment’ as ‘Minor head’, enter challan amount, BSR code, challan serial number and select the date of payment. Also, upload a copy of the challan (PDF) and click on the ‘Save’ button.

If you choose, ‘Disagree with the demand (Either in full or Part)’, Click on ‘Add reason and select the reasons as ‘Rectification/Revised Return filed at CPC’.

Choose the reason and enter the value of demand for which you have disagreed. If you are submitting a rectification return, enter the rectification return acknowledgement number and click on the ‘Submit’ button.

Post submission of the response you will get a confirmation of the transaction ID as shown below, save the same for future communications with CPC.