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CBDT Empowers U/S 154 to Speed Up Rectification of Tax Mistakes & Refunds

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By Arpit Kulshrestha
CBDT New Rules Aim to Correct Tax Returns and Issue Refunds Faster

The Central Board of Direct Taxes (CBDT) has announced a new framework aimed at facilitating the rectification of errors in tax returns and the issuance of refunds under the Income Tax Act, 1961. This decision aims to simplify the process for individual taxpayers to correct mistakes related to tax computation, prepaid tax credits, or refund processing. 

Under this new framework, the Commissioner of Income Tax at the Centralized Processing Centre (CPC) in Bengaluru will have the authority to manage cases that involve mistakes in records, including issues related to refunds, as stated in the notification.

Rules That Assist Taxpayers

Under the revised framework, the Income Tax Department can now address issues under Section 154 of the Act that involve:

  • Errors in tax calculations or refund determinations
  • Failure to consider prepaid tax credits (such as advance tax, TDS, or self-assessment tax)
  • Omission of eligible reliefs
  • Incorrect calculations of interest under Section 244A (which pertains to interest on refunds)

It signifies that if the income tax refund of the taxpayer has been incorrectly calculated or delayed because of clerical or record-based errors, then the authorities can correct the same and issue the revised refund or demand notice. 

Who Shall Manage Such Rectifications?

As per the notification, the hierarchy of income tax officials shall secure the authority to act on these rectifications:

DesignationHeadquartersJurisdiction
Commissioner of Income Tax (Centralised Processing Centre - CPC)BengaluruAll cases where orders have been passed through the interface between the Assessing Officer and CPC

The CBDT has authorised the Commissioner of Income Tax to delegate these authorities to Additional Commissioners, Joint Commissioners, and Assessing Officers under them for expedited processing.

What is the Significance of This Change?

For processing income tax returns and refunds, CPC Bengaluru is the central hub. By providing authority to the commissioner and subordinate officers to manage recitification cases, the motive of the government is to

  • Reduce delays in issuing refunds or resolving refund-related errors,
  • Ensure quicker grievance redressal for taxpayers,
  • Enhance precision in refund and interest calculations.

The income tax department’s measure is to make tax administration automated and taxpayer-friendly via technology-driven processing.

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