In case of an error, file a revised TDS return under Section 154(1)
Tax credit is the tax deposited in the government’s treasury via modes like tax deducted at source (TDS), advance tax, self-assessment tax, etc
The income-tax (I-T) department has asked taxpayers whose income-tax returns (ITRs) have not been processed yet to resolve the underlying issues quickly, so that processing can happen. Let us understand the reasons due to which processing gets stuck and what you can do about them.
The department had launched the Central Processing Centre (CPC) 2.0 in December 2020 with ‘Jhatpat processing’. Under this scheme, ITR 1 and ITR 4 are processed within two-three working days, provided certain conditions have been met.
Archit Gupta, chief executive officer (CEO), ClearTax, says, “Due to the CPC upgrade, processing has been faster this time — within two-three weeks. However, it can get delayed due to errors and irregularities.”
One common error is a tax credit mismatch.
What is tax credit mismatch?
Tax credit is the tax deposited in the government’s treasury via modes like tax deducted at source (TDS), advance tax, self-assessment tax, etc. Such a tax credit is reflected in Form 26AS. A situation where the tax refund claimed does not match the amount in Form 26AS is called a tax credit mismatch.
The most common reason for a tax credit mismatch is a TDS mismatch. It, in turn, arises due to various causes: TDS not deposited by the deductor; TDS deducted, but return not filed; TDS deposited under wrong permanent account number; incorrect amount mentioned in TDS return; and incorrect assessment year selected.
How to resolve mismatch
If the mismatch is due to the deductor’s error, he/she needs to file a revised TDS return correcting the details. The taxpayer should file a rectification of ITR under Section 154(1) through the I-T filing portal to rectify the mismatch.
Section 154(1) provides that mistakes that are apparent from the records can be rectified by the department.
Gopal Bohra, partner, NA Shah Associates, says, “Such errors include mathematical mistakes, non-grant of full tax credit, adjustment of refund against non-existent demand, etc. However, legal or debatable matters cannot be dealt with via rectification application.”
How to file condonation of delay request
- It is mandatory to verify ITR within 120 days of filing it, failing which the I-T department can consider it invalid
- However, you can file a condonation of delay request to state why you failed to verify ITR within that period
- Login to the e-filing portal https://www.incometaxindiaefiling.gov.in/home
- Go to ‘My Account’ menu and select ‘Request Type’ as ‘New Request’
- Select the ‘Request Category’ as ‘Condonation Request’
- Choose the suitable option located under ‘Response’ column and click on ‘Submit’
Source: Portal of income-tax department
Rectification of minor errors does not require re-filing of ITR.
“However, if the rectification leads to a change in the income reported, a revised return has to be filed. Also, one cannot claim additional deductions and exemptions not claimed in the original return while filing a rectification request,” says Gupta.
If rectification leads to an increase in tax liability or a reduction in refund amount, the department will send a notice to the taxpayer intimating the reason and the amount of increased liability.
“The taxpayer can submit explanations or raise an appeal against such rectification. Notice under this section can be issued up to four years starting from the end of the fiscal year in which the rectification order was issued,” adds Gupta.
If refund is delayed
While the I-T department had refunded Rs 1.91 trillion by the first week of February, many have still not received it.
Vivek Jalan, partner, Tax Connect Advisory Services LLP, says, “Refunds are generally processed within 45 days of filing the ITR.
If you have not received it, it might be due to incorrect bank account details on the I-T website. This can be rectified on the portal itself.”
“Sometimes refunds get delayed because the taxpayer does not reply to communication sent by the department regarding variation in income computed by the taxpayer and that computed by the department,” says Bohra.
This message is sent to the taxpayer’s registered email ID. Check your email regularly and send a quick reply to any such communication.