Updated tax returns: Budget 2025 offers a wider window to report omitted income

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Subscribe to enjoy similar stories. 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 9 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. The deadline for filing a belated or revised return is three months before the end of the assessment year, which, in this case, is 31 December, 2025.

A belated or revised tax return can be filed without having to pay any additional tax beyond the usual tax amount due. If the deadline for filing a belated or revised tax return has passed, taxpayers had no means to voluntarily declare any income they might have omitted in their ITR. To address this gap and alleviate concerns among taxpayers, the government introduced the concept of an updated return.