Planning vs Revising vs Updating Returns: Different Uses Explained
- Rajesh Kumar Kar
- 16 hours ago
- 8 min read
Planning, revising, and updating income tax returns are three distinct actions under the Income Tax Act, 1961, each serving a specific purpose in ensuring accurate compliance. Tax planning is done before filing to legally reduce tax liability, revising a return helps correct mistakes within the allowed timeline, while updating a return allows disclosure of missed income after deadlines with additional tax. Understanding when and why each option applies is critical for Assessment Year 2025–26, especially with evolving filing rules and extended timelines. Platforms like TaxBuddy simplify these processes by guiding taxpayers through the correct approach based on their situation.
Table of Contents
Tax Planning and Its Role Before Filing ITR
Tax planning refers to the process of organising income, investments, and expenses before filing the income tax return to legally reduce tax liability. It is a forward-looking exercise that ensures deductions, exemptions, and rebates are used correctly and within the framework of the Income Tax Act, 1961. Proper planning helps taxpayers avoid last-minute errors, incorrect regime selection, and missed benefits. It also ensures accurate classification of income under the correct heads, reducing the risk of future notices or revisions.
How Tax Planning Works Under the Old and New Tax Regimes
Tax planning begins with selecting the appropriate tax regime.
Under the old tax regime, planning focuses on deductions and exemptions such as Section 80C investments, health insurance premiums under Section 80D, and house rent allowance benefits.
Under the new tax regime, most deductions are not allowed, but lower slab rates and a higher basic exemption limit apply. Planning here involves evaluating whether the reduced rates offset the loss of deductions based on income structure.
Effective planning compares both regimes before filing to determine which results in lower tax outgo for the relevant assessment year.
What Is a Revised Return Under Section 139(5)
A revised return allows taxpayers to correct errors or omissions in an already filed original or belated return. Filed under Section 139(5), it completely replaces the earlier return. This option is useful when mistakes such as incorrect income reporting, missed deductions, wrong ITR form selection, or bank detail errors are discovered after filing. A revised return reflects the corrected income and tax computation as if it were the original filing.
When Can a Revised Return Be Filed for AY 2025–26
For Assessment Year 2025–26, a revised return can be filed up to 31 December 2025 or before completion of assessment, whichever is earlier. There is no limit on the number of times a return can be revised within this timeframe. Importantly, no penalty applies for filing a revised return if the correction is genuine and made within the allowed period.
Common Scenarios Where Revising an ITR Is Appropriate
Revising an ITR is appropriate in situations such as:
Omission of interest income or freelance receiptsClaiming deductions that were missed during original filingSelecting the wrong tax regimeIncorrect personal details or bank account informationChoosing an incorrect ITR form
Since a revised return replaces the earlier return entirely, accuracy at this stage is critical.
What Is an Updated Return Under Section 139(8A)
An updated return, introduced under Section 139(8A), allows taxpayers to declare previously unreported income even after revision deadlines have passed. It can be filed within 24 months from the end of the relevant assessment year. This mechanism encourages voluntary compliance by permitting disclosures with an additional tax cost, rather than facing penalties during assessments or notices.
When Updated Returns Become Necessary After Filing Deadlines
Updated returns are useful when income omissions are discovered much later, such as unreported foreign income, missed capital gains, or interest income not reflected earlier. They are also relevant when no return was filed at all. Unlike revised returns, updated returns cannot be used to reduce tax liability or claim refunds. Their sole purpose is to regularise past non-compliance.
Additional Tax and Limitations Applicable to Updated Returns
Filing an updated return requires payment of:
An additional tax of 25% if filed within 12 months from the end of the assessment yearAdditional tax of 50% if filed after 12 months but within 24 months
Only one updated return per assessment year is allowed, and it cannot be revised again. Updated returns cannot be filed if they reduce tax payable or result in a refund.
Key Differences Between Planning, Revising, and Updating Returns
Tax planning is proactive and done before filing to optimise tax liability. Revising a return is corrective and time-bound, allowing error correction without penalties. Updating a return is a last-resort compliance tool used after deadlines, involving additional tax. Each option serves a distinct purpose and applies at different stages of the tax lifecycle.
Choosing the Right Option Based on the Stage of Tax Filing
The choice between tax planning, revising a return, or filing an updated return depends entirely on when an issue is identified in the tax filing process. Each option is designed for a specific stage and serves a different compliance purpose under the Income Tax Act.
Before filing the income tax return, tax planning plays a critical role in ensuring both accuracy and tax efficiency. At this stage, income can be correctly classified under the appropriate heads, the suitable tax regime can be selected after comparison, and eligible deductions or exemptions can be factored in. Proper planning reduces the chances of errors, prevents missed benefits, and helps taxpayers avoid future corrections or notices.
After filing the return but within the prescribed deadlines, revision becomes the appropriate tool. If mistakes such as omitted income, unclaimed deductions, incorrect bank details, or wrong form selection are discovered, a revised return allows these errors to be corrected without any penalty. Since a revised return replaces the earlier return completely, it provides an opportunity to align the filing with the actual financial position while remaining fully compliant.
Once all revision deadlines have passed, updating the return is the only available option. This stage typically applies when unreported income or disclosures come to light much later, such as forgotten interest income, capital gains, or foreign income. Filing an updated return enables voluntary disclosure but requires payment of additional tax and interest. While it involves a higher cost, it helps regularise non-compliance and reduces the risk of future notices, penalties, or assessments.
Selecting the correct option based on the filing stage ensures smoother compliance and avoids unnecessary financial consequences. Acting at the earliest possible stage minimises costs, reduces administrative burden, and provides greater certainty in tax matters.
How Digital Platforms Simplify Planning, Revising, and Updating ITRs
Digital tax platforms streamline decision-making by comparing tax regimes, identifying filing errors, and guiding users through revision or updated return workflows. Solutions like TaxBuddy help taxpayers assess regime suitability, correct filings accurately, and stay compliant with evolving tax rules using automated checks and expert support.
Conclusion
Tax planning, revising returns, and updating returns are three distinct compliance tools designed for different stages of the tax process. Planning ensures legal savings, revision corrects timely mistakes, and updating returns enables post-deadline disclosures. Choosing the correct option safeguards taxpayers from unnecessary tax exposure and compliance risks. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. What is the main difference between tax planning, revised returns, and updated returns?
Tax planning is done before filing an income tax return to legally reduce tax liability through correct regime selection and eligible deductions. A revised return is filed after submission but within the allowed deadline to correct mistakes or omissions without penalty. An updated return is filed after all deadlines have passed to disclose missed income by paying additional tax and interest. Each option applies at a different stage of the tax filing lifecycle.
Q2. Is tax planning mandatory before filing an income tax return?
Tax planning is not mandatory but is strongly recommended. Without proper planning, taxpayers may choose the wrong tax regime, miss eligible deductions, or incorrectly classify income, leading to higher tax outgo or the need for revisions later. Planning helps ensure accuracy and compliance at the first attempt.
Q3. Can tax planning be done after the income tax return is filed?
No. Tax planning must be completed before filing the return. Once the return is filed, taxpayers can only correct errors through revision or disclose omissions through an updated return. Planning-related benefits such as deductions or regime choice cannot be newly introduced after filing deadlines.
Q4. What types of mistakes can be corrected through a revised return under Section 139(5)?
A revised return can correct genuine errors such as missed income, unclaimed deductions, incorrect tax regime selection, wrong ITR form, inaccurate personal or bank details, or calculation mistakes. The revised return completely replaces the earlier filed return and reflects the corrected information in full.
Q5. What is the deadline to file a revised return for AY 2025–26?
For Assessment Year 2025–26, a revised return can be filed up to 31 December 2025 or before the completion of the assessment, whichever is earlier. Revisions made within this timeline do not attract penalties if they are bona fide corrections.
Q6. Can a revised return be filed more than once?
Yes. There is no limit on the number of times a revised return can be filed within the permitted period. Each revised return replaces the immediately preceding return, making accuracy essential at every revision stage.
Q7. What is an updated return under Section 139(8A), and when is it used?
An updated return allows taxpayers to disclose income that was missed earlier after the revision deadline has expired. It can be filed within 24 months from the end of the relevant assessment year and is primarily intended to encourage voluntary compliance by allowing post-deadline corrections with an additional tax cost.
Q8. Can an updated return be filed to reduce tax liability or claim a refund?
No. Updated returns cannot be used to reduce tax payable, claim refunds, or increase losses. They are only meant for situations where additional income needs to be declared, resulting in higher tax liability, along with applicable interest and additional tax.
Q9. What additional tax is payable when filing an updated return?
If the updated return is filed within 12 months from the end of the assessment year, an additional tax of 25% of the tax payable is levied. If filed after 12 months but within 24 months, the additional tax increases to 50%, along with applicable interest. This is over and above the regular tax liability.
Q10. Can an updated return be revised or corrected again?
No. Only one updated return per assessment year is permitted, and once filed, it cannot be revised further. Therefore, complete and accurate disclosure is critical before submitting an updated return.
Q11. Does filing a revised or updated return increase the risk of scrutiny?
Minor and genuine corrections through revised returns generally do not increase scrutiny risk. However, significant changes in income, large additions, or frequent corrections may attract verification. Updated returns involving substantial additional income may also be reviewed to ensure the correctness of disclosure.
Q12. How can digital platforms help decide whether to plan, revise, or update a return?
Digital platforms analyse filing timelines, income data, and tax regime suitability to guide taxpayers toward the correct compliance option. Tools and services offered by TaxBuddy assist with regime comparison, error identification, revision workflows, and updated return filings, helping ensure accurate and compliant tax submissions.
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