Section 154 of Income Tax Act (2023 Guide)

Taxpayers can make mistakes when filing their income tax returns. During the evaluation, the competent authority will highlight such errors from the record. Taxpayers can correct these errors under section 154 of the Income Tax Act. Amendments are generally upon receipt of section 143(1) notice. Errors are identifiable from the available documentation.

What is Section 154 of Income Tax?

Section 154 of the Income Tax Act of 1961 deals with the rectification of inaccuracies in official income tax records. Under this tax provision, orders issued under Sections 143(1), 200A(1), and 206CB(1) of the Income Tax Act are amendable.

How do I rectify US 154 online in a new portal?

Procedure for Filing a Tax Rectification Request Under Section 154.

1. Log in to the electronic filing portal with a valid user ID and password.

2. Click Services >> Rectification.

3. On the Rectification page, select New Request.

4a. On the New Request page, your PAN will be automatically populated. Select income tax or wealth tax.

4b. Select an assessment year from the drop-down list. Click Continue button.

Note: If you select the Wealth Tax option, you must enter the latest intimation reference number.

5. Categorization of Rectification requests are as follows:

Income Tax Rectification Request

5.1 Income Tax Rectification: Reprocess the Return

1. Select Reprocess the Return as the request type.

2. With this option, all you have to do is submit a fix request and click continue.

3. On submission of your request, you will be redirected to the electronic verification page.

5.2: Income Tax Rectification: Tax Credit Mismatch Correction

1. Select Tax Credit Mismatch Correction as the request type.

2. The schedule for this request type is auto-populated based on available records for the corresponding processed returns. To edit or delete a schedule, first, select it, then click Edit or Delete.

3. Fill in the details under the following schedule: 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. Click Save as Draft.

4. Click Continue to submit the request. 

5.  On submission of your request, you will be redirected to the electronic verification page.

5.3 Income Tax Rectification: Additional Information for 234C Interest

1. Click Add Details on any of these records, that apply to you:

• Income from PGBP accrue or raise, first time (Applicable for 2016-17 onwards)
• Special Income Mentioned in 2(24)(ix) Taxable u/s 115B
• Income Referred in Section 115BBDA (Applicable for 2017-18 onwards)

2. Click Edit or Delete if you need to make changes to a completed record.

3. Click Continue to submit your request.

4. On submission of your request, you will be redirected to the electronic verification page.

5.4 Income Tax Rectification Request: Status Correction

1. Select Status Correction as the request type.

Note: Status correction applies only to ITR-5 and ITR-7 till AY 2018-19.

2. Select the appropriate status from the list:

• Private Discretionary Trust
• Society Registered under Societies Registration Act 1860 or corresponding Act of the State
• Estate of the deceased
• Any other Trust or Institution
• Primary Agricultural Credit Society/ Primary Co-operative Agricultural Bank
• Rural Development Bank
• Other Cooperative Bank

Step 3: On the Add Details page, answer the additional questions by selecting the Yes / No options. Click Continue. 

Your selected status correction may require the uploading of supporting documents. Click the Attachment, and upload the required document in PDF format (maximum size is 5 MB). 

If you need to upload multiple documents, combine them into a zip folder and upload the folder. The maximum size for all attachments in the zip folder is 50 MB.

4. On submission of your request, you will be redirected to the electronic verification page.

5.5 Income Tax Rectification: Exemption Section Correction

1. Select Exemption Section Correction as the request type.

Details of the Exceptions Section Amendments apply only to ITR-7 for years 2013-14 to  2018-19.

2. On the Add Details page, fill in all the following fields: Name of the Projects/Institution, Approval/Notification/Registration Number, Approving/Registering Authority, and Section under which the institution has claimed exemption. 

Click Attachment to upload the necessary supporting documents in PDF format (maximum size is 5 MB).

3. On submission of your request, you will be redirected to the electronic verification page.

5.6a Income Tax Rectification: Return Data Correction (Offline)

1. Select Return Data Correction (Offline) as the request type.

2. Select the applicable rectification reasons. If applicable, you can select multiple reasons in each category. 

3. Select the schedule that needs to be changed, then click Continue.

4. Click Attachment and upload the Rectification XML / JSON generated from the ITR offline utility (maximum size is 5 MB).

5. Fill in the Donation and Capital Gains details, if applicable.

6. Click Continue to submit the request. 

7. On submission of your request, you will be redirected to the electronic verification page.

Step 5.6b Income Tax Rectification: Return Data Correction (Online)

1. Select Return Data Correction (Online) as request type.

2. Select the rectification reasons. If applicable, you can select multiple reasons for each category.

3. Click Add Details on the applicable schedules to correct the details.

4. After updating all schedules, click Continue.

5. On submission of your request, you will be redirected to the electronic verification page.

Wealth Tax Rectification Request

5.7 Wealth Tax Rectification: Reprocess the Return

Step 1: Select Reprocess the Return as request type

This request is valid only for AY 2014-15 and 2015-16, as Wealth Tax was repealed in the Union Budget 2016-17.

Step 2: Select Tax / Interest Computation and click Submit.

Step 3: On submission of your request, you will be redirected to the electronic verification page.

5.8 Wealth Tax Rectification: Tax Credit Mismatch Correction

1. Select Tax Credit Mismatch Correction as request type

2. Details from your processed return appear for correction. Click Edit or Delete if you need to change or delete a record.  If your record is incomplete, click Add Details.

3. Click Continue to submit the request.

4. On submission of your request, you will be redirected to the electronic verification page.

5.9 Wealth Tax Rectification: Return Data Correction (XML)

1. Select Return Data Correction (XML) as the request type.

2. Enter the rectification reason in the text box, and click Attachment to upload the Rectification XML generated from the ITR offline utility (maximum size is 5 MB).

3. On submission of your request, you will be redirected to the electronic verification page.

Your request will be sent after successful validation. A success message will appear. You will receive a confirmation message on the e-mail ID and mobile phone number registered in the e-filing portal

What is the time limit for rectification under section 154?

On a suo moto basis, the time limit for rectification under section 154 is a maximum of 4 years from the end of the financial year in which the order is issued. The altered order does not necessarily imply the original order. This can be any order, including orders rectified or amended.

Frequently Asked Questions (FAQ)

Can an appeal be filed against the 154 order?

Yes, you can file an appeal against u/s154 rectification order.

Who has the authority to serve notice to an assessee under section 154?

Income Tax authority serves rectification notice to an assessee under section 154.

Wrapping Up

For minor differences, the Income Tax Office can correct itself. However, if you subsequently notice that something is wrong, you can always file a complaint on the official portal of the department. Remember, it’s important to ensure 100% accuracy in every step you take.

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