CBDT has reported that over 1.32 crore updated income-tax returns were filed in the four years since the introduction of the ITR-U facility under Section 139(8A) of the Income Tax Act. This voluntary compliance mechanism, introduced in the Union Budget 2022-23, generated ₹16,083 crore in additional tax revenue. The scheme allows taxpayers to correct omissions or errors in originally filed returns by paying additional tax, reducing litigation and broadening the tax base.

Section 139(8A), introduced via the Finance Act 2022, created the 'Updated Return' or ITR-U facility. Before this, taxpayers who missed declaring income or made errors had very limited post-deadline options; they could only revise returns within the same assessment year. ITR-U expanded this window significantly — originally to two years beyond the relevant assessment year, and subsequently extended to four years in Budget 2025-26 — but at a cost: taxpayers must pay additional tax of 25% of aggregate tax and interest if filed within 12 months, rising to 50% if filed between 12 and 24 months, and further slabs for later filings.

The mechanism works as a voluntary compliance nudge: instead of the department initiating scrutiny and prosecution for under-reported income, taxpayers self-correct and pay a premium. This reduces the litigation pipeline, lowers administrative burden on the department, and increases revenue without adversarial enforcement.

For exam purposes, this connects to three key themes: (1) direct tax reform and fiscal consolidation — higher voluntary compliance reduces the fiscal deficit pressure; (2) the Union Budget as a policy instrument — ITR-U was a Budget 2022-23 provision, making its outcome data exam-relevant in the 'fill the blank' template; and (3) the broader principle of tax buoyancy and widening the tax base without raising rates. The ₹16,083 crore figure and 1.32 crore return count are the two withheld-datum candidates the examiner will exploit.