What is section 154 of Income tax act + How to rectify ITR u/s 154

You are a taxpayer, it doesn’t mean you only make mistakes, sometimes the Income-tax department also makes mistakes due to some technical glitch.

In this article, we will learn about mistake rectification under section 154 of income tax act.

Before moving ahead:

What is section 154 of Income Tax

Income tax rectification has executed both ways from the individual (taxpayer) or by the department itself.

Mistakes made by you can be rectified by simply filing a revised income tax return u/s 139(5).

revised itr 139(5)

The process of rectification under section 154 of the income tax act.

Two ways can be used to rectify the return

  • The Income Tax Department itself send a rectification notice if it finds any discrepancies in the process.
  • The taxpayer should apply and inform the department about the mistake.

Also Read:E-verify Income Tax Return.

Rectification under section 154

The kind of errors falls u/s 154 during filling income tax return.

  • Error in facts (real true)
  • Arthimatic (calculation mistakes)
  • Advance tax amount difference
  • The difference in amount tax credit
  • Some additional information discloser error
  • Gender error

Features of Section 154

  • The Income-tax department sends you the notice due to some mistakes or errors like gender, tax credit mismatch, refund mismatch or advance tax discrepancy.
  • If any action is taken under section 154 results in addition of tax payable, or deduction in the amount of exemptions, the IT department should notify to the respective taxpayer regarding the same and allow him to explain the discrepancy found.
  • If any action is taken under Section 154 results in a decrease in the amount of tax payable or increase in the amount of exemptions, then the IT Department should provide the refunds to the taxpayer.
  • If the refund to the taxpayer is made and after rectification, the refund amount comes to be less, in that case, the income department asks for a refund.

How to file rectification return u/s 154? Step by Step Guide

Step 1: – Log in to Income Tax Website using your login ID.

Step 2: – Move your cursor to ‘efile’ drop down and click rectification mentioned in the red block.

Rectification form

Sep 3: – Select return to being rectified. (Income tax return or Wealth tax return).

return to be rectified

Step 4: – Select an assessment year (dropdown option).

rectification assessment year

Also Read:Check Income Tax refund Status

Step 5: – You will get 4 options

  • Tax credit mismatch correction only.
  • Return data correction (XML)
  • Only reprocess the return
  • Additional information for 234C

rectification type

Step 6: – You must comply with the instruction by selecting the options, your rectification falls under.

Step 7: – Click submit.

If the taxpayer applies for the rectification, the assessing officer should either accept or refuse the rectification form within six months from the end of the month in which the rectification is filed.

What is the Time limit for rectification under section 154?

It is very important to understand the time limit for rectification u/s 154. Rectification of ITR is permitted only up to 4 years of filing your return. The period of 4 years is from the date of the order sought to be rectified and not 4 years from the original order.

If the taxpayer applies for the rectification, the Assessing Officer should either accept the rectification or refuse it within six months from the end of the month in which the rectification is filed.

Also Read:– What is the best money saving idea for salaried employee?

3 thoughts on “What is section 154 of Income tax act + How to rectify ITR u/s 154”

  1. I went through your posts and what I found in your posts was truly amazing and keep up the good work.
    you share a such of wonderful information, it’s very helpful to us.

  2. Sir, I got an income tax demand notice u/s 143(1) for AY 2017-18. I need to file for rectification online to CPC.
    Q1) Do I need to download the latest excel sheet from income tax website and use it or the old one that I filled for the original return can be used with updated numbers ?
    Q2) What code (u/s ?) should be used in the excel sheet sheet for rectification return ? As I understand rectification is done u/s 154, but that section is missing from the excel sheet code pull-down.

    Please help


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