Under current income tax rules, taxpayers can voluntarily revise or correct errors in their returns only until December 31. After this date, any correction can be made only through an “Updated Return” under Section 139(8A), which carries substantial additional tax and penalties.
Chartered accountant Viraj Mehta, Chairman of the Direct Tax Committee of the Chamber of Tax Consultants, said taxpayers who miss the deadline may face an additional tax burden ranging from 25 per cent to as high as 70 per cent, depending on when the updated return is filed. “In the first year, the additional tax is 25 per cent of the payable amount, rising to 50 per cent in the second year and up to 70 per cent by the fourth year, apart from applicable interest,” he explained.
Income tax department data shows that about 8.5 crore returns had been filed and verified by December 28, of which nearly 7.8 crore have already been processed. However, over 70 lakh returns remain pending at the Central Processing Centre (CPC), many of them linked to refund claims or data mismatches.
Tax experts note that common issues delaying refunds include mismatches between Form 16 and ITR data, unverified deductions, and questionable claims such as political donations. More than 21 lakh revised returns have been filed so far this year, indicating a rush by taxpayers to correct errors before the deadline.
Experts clarified that missing the December 31 deadline does not automatically lead to forfeiture of refunds. If a return is accurate and processing is delayed due to the department’s workload, the taxpayer is entitled to interest at 0.5 per cent per month on the refund amount. However, refunds can remain frozen if discrepancies are found and not corrected in time.
Rohit Jain, Managing Partner at Singhania & Company, cautioned that ignoring mismatch alerts could have serious consequences. “If discrepancies are flagged and not addressed, the department may treat it as under-reporting or misreporting of income, attracting penalties of up to 200 per cent under Section 270A,” he said.
With the correction window closing tonight, tax professionals are urging taxpayers to review their returns carefully and act immediately to avoid higher tax costs and prolonged scrutiny.
