Can I revise my income tax return to claim certain DTAA benefits?

I filed my income tax return (ITR) as a non-resident Indian (NRI) and it has been processed. If I want to revise the ITR before 31 December do I need to file an updated ITR? I forgot to show some interest income that is taxable at 12.5% under a double taxation avoidance agreement (DTAA).

– Name withheld on request

Since you mentioned that your interest income is taxable at the rate of 12.5% under the DTAA, I will make two assumptions: (a) you qualify as a non-resident under DTAA; and (b) for simplicity sake, the interest income relates to interest earned on an non-resident ordinary (NRO) bank account.

You mentioned you’ve already filed your ITR for FY24 but missed reporting the taxable interest income from your NRO account. You can file a revised return under Section 139(5) any time before 31 December 2024 to correct this error. If you miss the deadline you won’t have any option left but to file an updated return (ITR-U) by 31 March 2027. However, filing an updated return will attract an additional liability of 25% or 50% on the amount of tax, depending on the when you file it.

Since the India-UAE DTAA has a beneficial tax rate of 12.5% on interest income, you can still offer to tax the forgotten interest income at this rate while revising your original tax return or while filing an updated tax return.

A revised return can be filed before the completion of assessment even if the original return has been processed by the tax department. On the other hand, an updated return cannot be filed during or after the assessment/reassessment.

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Harshal Bhuta is a partner at chartered accountancy firm PR Bhuta & Co.

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