Dec 31 deadline nears for revised and belated ITRs: What options are left for taxpayers from Jan 1

December 31 deadline nears for revised and belated ITRs

• December 31 is the last date to file belated or revised income tax returns
• Updated returns allowed up to 48 months with higher penalties and limits.
• Experts urge timely filing to avoid penalties and loss of benefits

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With just two days left before the December 31 deadline, taxpayers who missed the original income tax return deadline are running out of time to file a belated return. After this window closes, the belated filing option will no longer be available, resulting in increased compliance costs for late filers.

Any correction or disclosure thereafter must be routed through an updated return under Section 139(8A) of the Income Tax Act. Though the law allows this option for up to 48 months from the end of the assessment year, it is not a neutral fix. Additional tax outgo is common, refunds can shrink or vanish, and some benefits may no longer be available. Advisors say misunderstanding these options at the deadline stage often turns a small lapse into an expensive one. Let us understand the difference between belated, revised and updated returns:

Revised return

Over the past few months, the income tax department has issued a series of notices to taxpayers after data mismatches surfaced across ITR and Form 16 of taxpayers. In several cases, income reported in Form 16 did not align with figures reflected in annual information statements, leading to refunds being put on hold. Separately, taxpayers also received notices linked to political donations and overseas assets that were either incorrectly reported or omitted altogether.

Around 21 lakh taxpayers have already updated their income tax returns for the relevant period. For those who filed on time but later discovered errors, a revised return under Section 139(5) of the Income Tax Act offers a way to correct mistakes and bring the filing in line with actual disclosures.

Importantly, the revised return replaces the earlier filing entirely. Experts point out that revisions are permitted multiple times, but only until the same December 31 deadline or completion of the assessment, whichever comes earlier.

Penalty/Interest: A revised return does not attract any penalty unless the error is intentional or fraudulent. No interest unless tax remains unpaid.

Set off, carry forward of losses, and refunds: In a revised return, losses declared in the original filing can be corrected and carried forward, as long as the original return was filed within the due date. Refunds can also be claimed or rectified, subject to verification and assessment by the tax department.

Belated return

A belated return under section 139(4) comes into play when a taxpayer fails to file the original income tax return by the prescribed due date. While the law allows such returns to be filed later in the same assessment year, this flexibility comes at a cost. December 31 marks the final opportunity to file a belated return for the year.

Penalty/Interest: Late filing attracts a penalty of up to Rs 5,000. For taxpayers with a total income below Rs 5 lakh, the fee is capped at Rs 1,000, while interest is also charged on any outstanding tax amount. In some cases, the choice of tax regime may no longer remain open.

Set off, carry forward of losses, and refunds: In a belated return, taxpayers are allowed to set off losses against income in the same financial year. However, the carry forward of most losses, such as business losses or capital losses, is generally not permitted. Refunds can still be claimed, though these cases often see longer processing timelines.

Updated return

The updated return extends the correction window far beyond the assessment year. Using the ITR-U form, taxpayers can file or update returns up to 48 months after the end of the relevant assessment year. So, for ITR filed in 2025 (AY: 2025-2026) the deadline for revised ITR will be till March 31, 2030. This option is particularly useful for those who failed to file a return altogether or disclosed income incorrectly in earlier years. However, the extended window comes with higher additional tax outgo, and only one updated return is allowed per year.

“In case the someone fails to file revised return by December 31, 2025, from January 1, 2026, he has to mandatorily file an updated return and in certain situation it may attract penalty proceedings,” said Mehul Sheth, CA and Secretary of The Chamber of Tax Consultants.

Penalty/Interest: The additional tax payable on updated returns is 25 percent, 50 percent, 60 percent, and 70 percent applicable in the first, second, third, and fourth years, respectively. ITR-U once filed must be verified as well.

Set off, carry forward of losses, and refunds: An updated return is the most restrictive. It cannot be used to create, increase, or carry forward losses. Similarly, refund claims are not allowed.

The Income Tax Department have repeatedly advised taxpayers not to treat the updated return as a substitute for timely filing. The December 31 deadline remains crucial for those looking to minimise penalties and secure refunds without added financial cost.

For taxpayers still undecided, experts recommend acting sooner rather than later. While the law provides multiple correction paths, each delay narrows options and raises the eventual tax bill. “A return nowadays is not only a computation of your tax liability but also a full and correct disclosure of all relevant items that the government wants you to report. Taxpayers should look at revision or updation of returns only as exceptional steps and treat return filing with attention and careful diligence,” said Anish Thacker, CA & Former President of The Chamber of Tax Consultants.