The deadline for filing income tax returns for the fiscal year 2023-24 ended on July 31. Despite repeated appeals from taxpayers, the Income Tax Department decided not to grant an extension on the deadline.
However, taxpayers still have the option to file belated IT returns, albeit with a penalty. The deadline for submitting belated returns is December 31.
Here's what taxpayers must know about the consequences of missing the deadline and filing a late return:
Recognising delayed returns: A tax return filed after the initial deadline is referred to as a belated return under Section 139(4) of the Income Tax Act. Taxpayers who missed the July 31 deadline for filing their returns have until December 31, to do so for the assessment year 2024-25. It's important to remember that filing returns after the deadline does not shield taxpayers from fines or other repercussions.
Fines for filing delayed: There is a Rs 5,000 penalty for taxpayers who file their taxes after the deadline. The fine is Rs 1,000 for anyone whose income is less than Rs 5 lakh. The purpose of this penalty is to incentivise prompt adherence to tax reporting deadlines.
Interest: Under Section 234A, taxpayers who owe unpaid taxes will be charged interest at 1% per month beginning August 1 until the tax is paid. This extra expense can add up rapidly, raising the overall amount due.
Loss of exemptions: Under the old tax system, filing a late return resulted in the loss of exemptions. The new tax system will apply to taxpayers filing delayed returns, prohibiting deductions and exemptions under sections 80C and 80D, among other things.
Carrying over losses: Failure to file by the deadline results means the taxpayers will lose the chance to carry over capital losses to subsequent years. This could also affect taxpayers' ability to deduct their losses from future capital gains.
The default tax regime: The new tax system will be the default tax regime for the fiscal year 2023-24. Late filers will immediately be switched to this regime and will no longer be eligible for deductions offered by the old tax system.
Confirmation of delayed refunds: Taxpayers must ensure the late return is validated. Online verification is the quickest and most convenient way to confirm the return for a seamless filing procedure.
In conclusion, even if taxpayers have the option to file a late return in case they have missed the deadline, they should be ready to pay penalties and forfeit certain benefits.