Budget Offers a Window to Add Omitted Income

Updated returns filed within 24-36 months face 60% extra tax; for 36-48 months it is 70%

- Neeraj Agarwala

In the Union Budget for 2022-23, India's finance ministry introduced the concept of updated tax returns to promote voluntary tax compliance. At the time, finance minister Nirmala Sitharaman said that its purpose was to motivate taxpayers to voluntarily disclose any income omitted in their original tax filings.

Three years on, this initiative has seen a significant uptake, with nearly nine million taxpayers opting to update their returns. Building on this success, the finance ministry has now proposed to extend the deadline for filing updated returns from two years to four years.

Taxpayers are required to file their income tax returns (ITR) within four to six months from the end of the financial year. For the financial year 2024-2025, a salaried individual must file their original ITR by 31 July, 2025. If a taxpayer misses this deadline or discovers any omissions or errors thereafter, they have the option to submit a belated or revised return.