CBDT eases income tax refund process: How new rules will help correct ITR errors and tax demand mistakes quickly

The Central Board of Direct Taxes (CBDT) has taken a decisive step to streamline tax administration and expedite the correction of common errors in processed returns.

In a landmark notification dated October 27, 2025, the CBDT granted significant concurrent powers to the Commissioner of Income Tax, Centralised Processing Centre (CPC), Bengaluru. This move focuses on simplifying the process of rectifying mistakes in cases handled through the CPC's digital interface.

1. Concurrent Rectification Powers (Section 154)

The CIT (CPC), Bengaluru, is now explicitly authorised "to rectify u/s 154 of the IT Act 1961, the mistakes which are apparent from records."

This includes correcting issues such as:

2. Power to issue demand notices

The notification also grants the CIT (CPC) the concurrent power "to issue notice of demand under section 156 of the Income-tax Act, 1961" for any cases where a correction (rectification) results in a new tax demand.

3. Clear jurisdiction

These powers apply specifically to "All the cases where the orders have been passed through the interface between the Assessing Officer and the Centralised Processing Centre" (as specified in the annexed Schedule).

The notification further authorises the Commissioner to delegate these functions to the subordinate Additional Commissioners or Joint Commissioners and subsequently to the Assessing Officers, ensuring efficient handling of these issues across the CPC hierarchy.

• Faster refunds: Enables the CPC to quickly fix errors like missed pre-paid tax credits or incorrect interest, leading to the rapid issuance of correct refunds.

• Reduced delays: Centralises the power to rectify computational mistakes, avoiding delays caused by having to transfer cases between the CPC and local Assessing Officers.

• Simpler process: Provides a single, digital authority (CPC) for resolving errors related to automated return processing.

The CBDT notification states that it shall come into force "from the date of its publication in the official Gazette," formalising this crucial expansion of power to enhance digital tax governance.