Updated or revised ITR? What taxpayers need to know before Dec 31 deadline

'Knowing when to file an updated or revised ITR can safeguard your refunds,' says expert

As the December 31 deadline for filing income tax returns approaches, taxpayers are often confused about the difference between an updated and a revised return, and how errors or omissions could affect their refunds.

 

Mrinal Mehta,chartered accountant and joint secretary at Bombay Chartered Accountants' Society, explains the nuances.

Common errors flagged by CPC

The Centralised Processing Centre (CPC) frequently detects discrepancies during ITR processing that can impact refunds:

 

·  Mismatch in TDS claims: Claiming tax credits without reporting the corresponding income, or differences between ITR and Form 26AS/AIS figures, may result in reduced refunds or tax demands.

 

·  Undisclosed income: Income from interest, dividends, sale of securities or property, if not reported, can render a return defective.

 

 

·  Incorrect deductions: Claims without adequate documentation, such as donations under Section 80GGC or house rent allowance exemptions without landlord details, may be disallowed.

 

·  Excess claims by salaried employees: If exemptions or deductions exceed those reported by the employer in Form 16, CPC may initiate enquiries.  ALSO READ | ITR refund stuck? Experts warn December 31 delays could block revisions

Choosing between rectification and updated return

If an error is identified after the December 31 deadline:

 

·  Rectification under Section 154: For processing errors evident from CPC records, like reduced TDS credits or incorrect income computation, the taxpayer should file a rectification online.

 

·  Updated Return (ITR-U): For errors in reporting income, tax credits, or deductions identified by CPC, taxpayers can file an updated return within 48 months from the end of the assessment year. Mehta notes, “ITR-U can only be used for pending tax demands, not for changes in refund claims, and may attract additional tax of 25–70 per cent depending on filing time.”

Safeguarding Refunds

For pending refunds close to or beyond December 31, 2026, taxpayers have limited recourse. Mehta advises monitoring intimations from CPC via email and responding promptly. The law allows nine months from the end of the financial year to process returns under Section 143(1), but delays are common, particularly for complex returns or high refund claims. Filing returns early and responding quickly to CPC intimations can protect legitimate refunds.

 

In short, understanding when to file an updated return versus rectification, and staying vigilant with CPC communications, is crucial for avoiding disputes and safeguarding tax refunds.