Income Tax returns: Here's what happens if one misses the ITR filing last date

Wondering what will happen if you procrastinate and don't file your income tax return (ITR) by July 31 this year? Experts suggest missing this deadline can lead to several consequences, from penalties to legal repercussions. Every year, individuals and businesses are required to file their ITR by July 31 in India. However, the tax system does provide a second chance to the taxpayer by providing them with an option of belated returns and the new ITR-U. 

In this article, we'll explore the implications of missing the ITR deadline and offer insights into how to navigate this situation effectively.

What happens if you miss the ITR July 31 deadline? 

As per CA Ruchika Bhagat, MD, Neeraj Bhagat & Co., the following will be the consequences of missing the deadline: 

Late filing fees: Under Section 234F of the Income Tax Act, filing your ITR after the due date but before December 31, 2025, can result in a penalty of up to Rs 5,000. If you file after December 31, the penalty can increase to Rs 10,000. However, if your total income is up to Rs 5 lakh, the maximum penalty is capped at Rs 1,000.

Interest on tax due: If you have any tax dues, interest under Section 234A will be levied for the delay in filing your return. This interest is calculated at one per cent per month or part of a month on the unpaid tax amount from the due date until the date of filing.

Loss of interest on refunds: Taxpayers expecting a refund might lose out on interest for the period of delay. Interest on refunds starts accruing from the date of filing the return, so a delayed filing means delayed interest accrual.

Ineligibility to carry forward losses: If one misses the deadline, they will not be able to carry forward losses under various heads of income, except for house property. This can be a significant financial disadvantage for businesses and investors.

Reduced time for rectifications and revisions: Filing late reduces the time available for correcting errors or revising the return. The deadline for revising an ITR is typically the end of the assessment year, and a late filing compresses this timeline.

What to do if you miss the ITR deadline?

File belated return and ITR-U

Belated Return: If one misses the July 31 deadline, they can still file a belated return under Section 139(4) of the Income Tax Act. The belated return can be filed until December 31, 2025. While this allows taxpayers to fulfill their tax obligations, it comes with penalties and interest charges, and they cannot carry forward losses other than those related to house property.

ITR-U (Updated Return): Introduced as a part of the Finance Act 2022, the ITR-U allows taxpayers to update their income tax returns within two years from the end of the relevant assessment year. This facility is designed to help taxpayers correct omissions or errors in their original or belated returns. However, filing an updated return incurs an additional tax, which can be 25 per cent of the tax and interest due if filed within the first year, and 50 per cent if filed in the second year.

Things to remember if one misses the ITR filing deadline:

>> To minimise penalties and interest, one should file their return as soon as they realise they have missed the deadline. The sooner they file, the lower their additional financial burdens will be.

>> Calculate and pay any taxes due immediately to stop further accrual of interest and penalties.

>> Keep track of tax deadlines and set reminders. Being proactive about one's tax obligations can help avoid last-minute stress and potential penalties.

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