While taxpayers have to file their tax returns within a deadline to avoid paying a penalty and to avoid losing certain income tax benefits, the last date or the due date for filing ITR varies depending on the category of the taxpayer. For instance, salaried individuals and other taxpayers whose accounts are not required to be audited must file ITRs by July 31. Similarly, taxpayers whose books of accounts are required to be audited (but transfer pricing not applicable) must file their ITR by October 31.
The biggest consequence of missing the deadline to file an income tax return is the levy of penalty. Apart from paying a late filing fee or penalty, taxpayers will also lose other tax benefits for filing ITR late.
ssentially, the last date or deadline to file ITR is the due date for filing the original ITR. While ITR can be filed after the due date/last date but it would attract penalties and various consequences for the tax payer. ITR filed after the due date may be either belated or updated ITR, as the case may be. In cases, where the ITR is filed within the due date, but there are any errors or omissions in the ITR, the taxpayer may consider to file the revised ITR.
Currently an individual is filing ITR for FY 2023-24 (AY 2024-25). The due date for the same can be July 31, 2024/October 31, 2024/November 30, 2024 (depending on the category of the taxpayer). Once this date is missed, an individual can file belated ITR till December 31, 2024 for FY 2023-24. For those who want to correct mistakes can file revised ITR till December 31, 2024 for FY 2023-24. If the taxpayer has missed filing original, belated or revised ITR, then updated return for FY 2023-24 (AY ..
Late filing fee on missing ITR filing deadline
A penalty is levied under Section 234F of the Income Tax Act, 1961, if an individual files a belated ITR (i.e., after the deadline). Currently, a penalty of Rs 5,000 is levied on taxpayers while filing a belated ITR. Taxpayers whose taxable income does not exceed Rs 5 lakh have to pay a penalty of Rs 1,000. The penalty is levied even if no additional taxes are payable while filing the ITR.
A penal interest may also be levied under Section 234A. This is levied if an individual pays his/her self-assessment tax dues after July 31. Interest penalty under sections 234B and 234C may also be applicable, provided advance tax payments have either been deferred or there is a delay in payment. The penal interest under section 234A/B/C is 1% per month.
Cannot choose old tax regime
An individual filing ITR after the deadline cannot opt for the old tax regime. Individuals get the option to choose the tax regime only if they file their ITRs within the deadline. From FY2023-24, the new tax regime is default tax regime. If the taxpayer files ITR before the deadline, then he/she can choose any tax regime, where the tax liability is lower. However, the income tax liability for a belated ITR is calculated based on the income on the income tax slabs under the new tax regime. Further, taxpayer loses the option to claim deductions available under the old tax regime.
Carry forward of losses is not allowed
Apart from paying a penalty, a late filer also loses the benefit of setting off of capital losses against capital gains, if any. Income tax laws allow individuals to set off their capital losses (short and long term) against capital gains (short and long term, as the case may be) under specified conditions. This lowers the taxable capital gains amount, which in turn lowers the tax payable.
Dr Suresh Surana, Founder, RSM India - a business consulting group says, "An individual filing a belated return can set off their capital losses against capital gains during the year but carry forward of losses (except in case of house property) are not allowed. By losing this benefit of carry forward and set off of losses up to 8 years, the individual will have to pay higher taxes on the taxable capital gains amount in the subsequent years."
Financial year vs assessment year
Many individuals are confused about the difference between a financial year (FY) and an Assessment Year (AY). Under income tax laws, a financial year is the period for which the income earned by a person is aggregated and used to calculate the tax liability for that period. The assessment year, which starts immediately after the financial year ends, is the year when ITR is filed for the concerned financial year.
For instance, income earned in FY 2023-24 (between April 1, 2023, and March 31, 2024) will be assessed in AY 2024-25 (April 1, 2024, and March 31, 2025). Hence, the last date for filing ITR is July 31, 2024, for financial year 2023-24.
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