Income Tax refund: CBDT empowers CPC Bengaluru to rectify tax computation errors

ITR refund

The Central Board of Direct Taxes (CBDT) has issued a fresh notification authorising Commissioner of Income-tax at the Centralized Processing Centre (CPC), Bengaluru, to rectify errors and issue demand notices under the Income-tax Act. The move aims at improving the speed and accuracy of income-tax processing.

As per the directive, CBDT empowers CPC to exercise concurrent powers under Sections 120(1) and 120(2) of the Income-tax Act, 1961. These powers include the ability to correct mistakes under Section 154 and to issue demand notices under Section 156, ensuring faster resolution of taxpayer grievances related to computation or refund mismatches.

The notification also allows the authorised Commissioner to delegate powers in writing to Additional or Joint Commissioners of Income-tax, who can further assign specific tasks to Assessing Officers. This tiered authorisation is expected to streamline rectification and follow-up actions, ensuring accountability across the hierarchy.

It also empowers CPC-Bengaluru to directly handle corrections in cases processed through the digital interface between assessing officers and the CPC.

Mistakes That Can Be Rectified

Under the new framework, the Commissioner of Income-tax, CPC, Bengaluru, can now rectify any mistakes apparent from the record such as incorrect refund calculations, omission of prepaid tax credits (TDS, TCS, or advance tax), or non-consideration of reliefs under double taxation agreements.

“…directs that the Commissioner of Income-tax specified in column (2) of the Schedule hereto annexed, having his headquarter at the place specified in the corresponding entry in column (3) of the said schedule, shall exercise the concurrent powers: –

i. to rectify u/s 154 of the IT Act 1961, the mistakes which are apparent from records including any refund issued earlier under the provisions of the Act and/or non-consideration of any pre-paid tax credit and/or non-consideration of any relief eligible and/or calculation of interest u/s 244A of the IT Act 1961, in passing any order under the Income-tax Act resulting in error in computation of the Tax and/or refund determined and/or demand;

ii. to issue notice of demand under section 156 of the Income-tax Act, 1961 in such cases covered under (a) above,” Ministry of Finance’s notification dated October 27, 2025.

Why this matters

Taxpayers have often faced delays or errors in refund computation due to system-related mismatches at CPC, such as unaccounted TDS credits, non-consideration of reliefs, or interest miscalculations. By empowering CPC officials to rectify such mistakes directly, the CBDT aims to expedite refund processing and reduce taxpayer disputes.

The notification comes into force from the date of its publication in the Official Gazette, making it operational immediately.