What if I have selected wrong Assessment Year while paying tax?

In India, the period from 1st April to 31st March is known as Financial Year.

Assessment year is the year which will come after the Financial Year. An assessment year is a time during which the income which has been earned in the Financial Year is being assessed and taxed. The Assessment Year even starts on 1st April and ends on 31st March.

With respect to an Income Tax perspective, Financial Year is the time period of obtaining the income and Assessment Year is the year following the Financial Year and is the time period for evaluation of the income obtained in the previous year and to pay taxes for it. 

The terms Financial Year and Assessment Year have significant importance in the Income-tax Act, 1961. Both the terms have different meanings and usage. Starting from the process of selecting the year for filing Income-tax return to the payment of taxes to the government, taxpayers are required to select the Assessment Year. However, many taxpayers get confused and wrongly quote Financial Year in place of Assessment Year.

Taxpayers should quote the Assessment Year while filing for an Income Tax Return. As said earlier, the income obtained in a Financial Year is evaluated and taxed in Assessment Year. The income that has been earned in a Financial Year cannot be taxed until it is earned. There would be many unprecedented situations coming up like change in job or a loss of job and they can occur towards the mid or end of the Financial Year. So, assessment should only start after the end of the Financial Year. This is why taxpayers need to quote Assessment Year while filing for Income Tax Returns.

Once the Income-tax return is filed by the taxpayer, Income-tax department processes this return. The real problem starts when the taxpayer receives intimation from the Income-tax department saying that the tax is payable for such Assessment Year. The taxpayer checks his records and then he realizes that the year which he had mentioned while paying the online taxes was actually wrong.

The Income Tax Department usually sends intimation to the taxpayers after the filing of Income Tax Returns. There are quite some valid reasons due to which the Income Tax Department might issue intimation to the taxpayers.

• An increase or decrease in the payable tax
• An increase or decrease in the refund amount
• If any adjustments are to be made in the taxation
• If any errors have occurred during the filing of Income Tax Return

If you have received any such notice, Don’t worry!!!

There might have been a situation in which you receive intimation or notice from the Income Tax Department for the reason being paid tax in wrong assessment year. In such a case, there are two scenarios that are applicable. Either you have paid tax in wrong assessment year by physical method i.e. by depositing the challan in the bank or you have done the payment by online method.

Let us have a look at the procedure or the steps that need to be taken in order to rectify the mistake of payment of Income tax for a wrong assessment period.

Here are the steps you need to follow so to resolve the issue:

If the payment has been made by physical challan:

In case of the payment being made by physical challan, there are two scenarios applicable.

i] Correction within 7 days from payment of tax:

Many taxpayers make the tax payment through physical challans. In such cases, Income-tax department has allowed a 7 day period during which the correction in Assessment Year could be made by the Bank. The taxpayer needs to apply for correction to the bank within 7 days of the date of deposit of challan.

In this case, the taxpayer can send a challan correction application form to your respective bank. The draft format of challan correction application form to the bank will be consisting of the below- mentioned details.

• Taxpayer’s Name
• Taxpayer’s Address
• Taxpayer’s TAN/PAN
• Name of the Authorized signatory in case of a non-individual taxpayer

Along with these details, taxpayer ought to mention other important details related to the challan i.e. the BSR Code, Challan Serial number and the challan date.

Taxpayer needs to tick out or highlight the fields which need correction in your case. 

You may refer the Draft format of challan correction application to the bank.

Bank will consider the said application and correct the mistake accordingly.

ii] Correction after 7 days from payment of tax:

In case taxpayer realizes the mistake after 7 days, then he is required to apply to his Income-tax officer for the correction in challan.

The taxpayer can send a challan correction form to the Assessing Officer to rectify your wrong paid challan. The draft format of the challan correction application to the Assessing Officer should contain the below mentioned basic details.

• Name, Address,  and PAN of the taxpayer
• Details of the Assessing Officer i.e. Ward Number and Address
• Challan Details
• Name of the Bank where payment has been done
• BSR Code
• Challan Number
• Amount Paid
• Assessment Year as per the Challan
• Correct Assessment Year 

You may refer the Draft format of challan correction application to the Assessing Officer.

The Income-tax officer will consider the said application and correct the mistake accordingly.

Assessing Officer is the Income Tax Officer who has the power and authority to calculate the taxable income of an assessee. The Assessing Officer can verify the tax details and books of accounts of the assessee.

The jurisdiction of an Assessing Officer can be determined by the address mentioned by the assessee in his records for PAN.

Jurisdiction plays an important role in all correspondences related to the Income Tax Department. Any intimation or notice when needs to be sent to the taxpayer would be sent according to his address as per the Department’s jurisdiction.

It is quite easy to know about your Jurisdictional Assessing Officer. You can visit the website http://incometaxindiaefiling.gov.in/. In the Home page, you can select ‘Know Your Jurisdictional AO’. On entering your PAN and security code, you will get to know about your Jurisdictional Assessing Officer.

Click here to know about Jurisdictional Assessing Officer (Income Tax Officer)

If the payment has been made by online challan:

If the payment of taxes is made by the taxpayer by way of online banking, the taxpayer is required to apply to his Jurisdictional Assessing Officer (Income-tax officer) and request him to correct the details.

You may refer the Draft format of challan correction application to the Assessing Officer.

The Income-tax officer will consider the said application and correct the mistake accordingly.

When the demand against my name will be dropped?

On making the application to the Assessing Officer, the necessary corrections will be made by him in the Income-tax details of the taxpayer. Taxpayer may refer Form 26AS to ensure that requisite corrections have been made in his tax records. 

Once the taxpayer ensures himself that the correction has been done, he may proceed to file an Online Rectification application claiming that the Income-tax Return for the said Assessment Year shall be re-processed.

Let us know in details about how to apply for online rectification.

You can log into the Income Tax Department’s website and check into your own account. There you need to select the option ‘Rectification Request’. You can enter your PAN; select your Assessment Year and your Communication Reference Number. Then you can click on validate.

In the next step, if your correction is done; you can enter your PAN and select the rectification request type as ‘No further data correction required. Reprocess the case’. Next, click on ‘Submit’ button and it completes your online rectification procedure.  

Click here to know more about How to apply for online rectification?

Once the Income-tax Return is re-processed, the demand against the taxpayer should automatically get dropped. You may check the same into your login as well.

Conclusion

Hence, if you have selected a wrong assessment year while filing for your Income Tax Return; there are quite easy and convenient methods available for the correction and this procedure would also be accomplished within minimal time period. 

FAQs

1. Who is an AO?
   AO is the Assessing Officer and has the authority to calculate an assessee taxable income.
   
   
2. How can you know about your Jurisdictional AO?
   You can know about your jurisdictional AO by entering your PAN in the Income Tax Department’s website.