Direct Tax Amicus, March 2026

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Article

Updated returns in Union Budget 2026: Slightly distant from the home stretch?

By Dhananjai Dhokalia and Devashish Jain

The facility of updated returns was introduced as a landmark measure vide the Finance Act, 2022. This facility was aimed at encouraging voluntary disclosures of additional income by a certain category of taxpayers while developing an additional source of revenue for the government. In the recent Union Budget 2026, important changes have been introduced in the updated returns provisions. The article in this issue of Direct Tax Amicus discusses the concept of updated returns, the changes proposed by Union Budget 2026, their impact and the hits and misses of the amendments. Pondering over the question as to whether the Union Budget 2026 meets taxpayers’ expectations, the authors note that various changes are desirable to further effectuate the remedy sought to be provided by updated returns.

Notifications & Circulars
 

• Combating offshore tax evasion – Overview of amendments in Rules 114F to 114H
   
• India-France DTAC – Overview of the amending protocol signed by India and France

Ratio decidendi
 

• Sum received as an interim measure in arbitral proceeding is not taxable till litigation/ proceedings attain finality – Telangana High Court
   
• Reason not to be indicated for selecting a case for scrutiny while issuing a notice under Section 143(2) – Assessee cannot demand disclosure unless arbitrariness/vendetta shown – Delhi High Court
   
• Draft assessment order is mandatory even where revisionary powers exercised by PCIT under Section 263 – Gujarat High Court
   
• DRP cannot issue directions upon passing of final assessment order under Section 144C – Bombay High Court
   
• Sales tax subsidy granted by the state government, subject to specified fixed capital investment, is a capital receipt not chargeable to tax – Punjab & Haryana High Court