The deadline for tax return filing for the Assessment Year 2023-2024 closed just a few days ago on 31 July 2023. As per the Income tax department, over 6.5 crore Indians filed their returns this year. People who were expecting the officials to extend the deadline for filing their tax returns were sorely disappointed. There was no extra time given for tax return filing.
If you are one of those who missed their ITR filing, then you don’t need to panic. You have a chance to still submit your ITR. However, it comes with a twist.
What is Belated ITR?
Individuals who missed submitting their ITR within the deadline can still file returns. The Income Tax Act, of 1961 has a provision for ITR filing post-deadline under Section 139(4) called Belated ITR. However, there will be a penalty of late fee.
Tax return filing after the deadline
You have till 31 December 2023 to avail of belated ITR so that you can do your tax return filing for the AY 2023-24 after the window closes.
As per Section 234F of the IT Act, 1961, defaulters need to pay a fine of,
- Rs 5,000 if the total income is Rs 5 lakh and above
- Rs 1,000 if it is less than Rs 5 lakh
For individuals with income below the exemption limit, there will be no late filing fee.
Before you start assuming that belated ITR is a blessing in disguise, understand its cons. Belated ITR will also invite penalty interest at the rate of 1% per month on the taxable amount. Also, this interest is applicable on the net taxable income after the deduction of TDS (tax deducted at source), TCS (tax collected at source), advance tax, and other reliefs/ tax credits. Even if you delay filing by a day, the penalty interest calculated is charged with an interest for a month.
Let’s look at some of the issues with defaulting on tax return filing.
Disadvantages of Belated ITR
Retraction of exemptions
If you delay your tax return filing, you will not be able to leverage the exemptions or deductions applicable under some sections. Further, you cannot carry forward your losses like business or capital loss. It is a general practice for taxpayers to carry forward their business or capital losses to the subsequent year for set-off. This relief will not be available to you if you delay your ITR. However, if you experienced losses from residential property, you can claim an exemption.
Loss of tax refund
Usually, when taxpayers pay their taxes over the years leading up to the assessment process, they are liable for a refund when applicable after filing their returns. But delaying the ITR will lead to either delay in receiving refunds, loss in refund amount, or both.
Penalty for late filing
As mentioned earlier, you will have to pay a fine based on your income slab. However, with a proper justification, you have an opportunity to get away without paying a penalty.
Other important things to know
More often than not, taxpayers submit their tax filing online well within the deadline but fail to e-Verify their filing. In such instances, you will not face any fine if you do so within 30 days. However, if you fail to e-verify your filing within the time limit, it will be invalid.
Underreporting your income
Either due to ignorance or bad advice, individuals may be tempted to underreport their income to avoid paying taxes. But doing so will have serious repercussions. For starters, such individuals will be fined 200% of the actual tax due. You can escape the fine if you settle the taxes with interest and the assessment officer waives the penalty.
If you receive a notification from the income tax department regarding your ITR, you are duty-bound to respond to it through the e-filing website. If you ignore the notification, you can be subjected to legal action and even end up in jail.
Tax return filing is an important but uncomplicated process. The IT department has pre-determined windows for every part of the tax process. It will do you good to make a note of such important tasks and be proactive. Regardless there are chances that you miss out on submitting ITR due to a variety of reasons. Although a provision extension is often provided by the officials, it is not compulsory. But you can still submit your tax returns through belated ITR.
If you need help filing your belated ITR, TaxSpanner is here to help. We have expert CAs who will guide and assist you with the process. They can help you understand the filing rules and make sure your taxes are submitted correctly.