Tax Alert: File Your Revised ITR by December 31 or Risk Refund Delays, Interest & Penalties

As 2025 draws to a close, several critical financial deadlines are fast approaching, with belated and revised Income Tax Returns (ITR) topping the list. Taxpayers who fail to file their revised ITR by December 31, 2025, risk delays in tax refunds and may even incur interest or penalties, especially if the information in their ITR does not match government records.

Why This Date Matters
December 31, 2025, is the last day to file both belated and revised ITRs for the assessment year 2025-26 (FY2024-25). The Income Tax Department’s Central Processing Centre (CPC) examines returns and flags any discrepancies. If your ITR is checked after December 31 and errors are found, you may lose the opportunity to correct them. Chartered Accountant Suresh Surana warns that once this deadline passes, taxpayers cannot amend their returns, even if the department has not processed them yet.

Who Might Face Trouble?
Abhishek Soni, CEO of Tax2win, says many salaried individuals are receiving notices due to mismatches. This typically happens when employees claim deductions under sections like 80C, 80D, or HRA but fail to provide corresponding details to their employer. Manish Bawa, partner at Nangia Global, adds that such mismatches are common, often arising from reporting errors or changes in the tax regime—for example, if TDS was deducted under the new tax regime, but the employee filed under the old regime.

Notices Being Issued
The Income Tax Department has sent SMS and email alerts to numerous taxpayers, highlighting mismatches between the ITR and data available with the department. Many refunds have been withheld pending correction, and taxpayers are being instructed to file revised ITRs by December 31. Some notices also point out claims for deductions to which taxpayers were not entitled.

Common Reasons for Notices

• Claiming incorrect or excessive tax deductions.
• Mismatched income reported in AIS/TIS statements and ITR.
• Discrepancies between Form 26AS and ITR.
• Incorrect claims for HRA or Leave Travel Allowance (LTA).
• Unsupported claims for insurance, donations, or political contributions.

Other Hidden Income Concerns

• Profits from mutual fund redemptions.
• Capital gains from the stock market.
• Income from crypto assets.
• Interest or other capital gains.

What to Do if You Receive a Notice
Abhishek Soni emphasizes that a notice indicates a mismatch between your ITR and the department’s records. Ignoring it can lead to higher taxes, interest, or further legal notices. Manish Bawa advises correcting any flagged errors immediately. Filing a revised return by December 31, 2025, can prevent your claims from being rejected and avoid penalties or interest charges.