Updated Income Tax Return

The short answer is no, you cannot file an Updated Income Tax Return (ITR-U) to increase the leave encashment exemption and claim a refund for your client.

You cannot use an ITR-U to increase your client's leave encashment exemption from Rs. 3 lakh to Rs. 25 lakh. Section 139(8A) strictly prohibits using an Updated Return to decrease tax liability or claim a refund. Additionally, the standard CBDT notification limits the Rs. 25 lakh exemption to retirements occurring on or after April 1, 2023.