Filing Belated ITR? Here is Why You Should Always File Returns on Time

Filing Belated ITR? Here is Why You Should Always File Returns on Time

As the Income Tax Return (ITR) filing deadline has been extended to September 15, taxpayers have more time to file their return. Over 2.50 crore ITRs have been filed so far. The due date extension has led many taxpayers to assume they have much time left. As a result, a large number of individuals are choosing to wait until the last day to file their returns. However, did you know that filing your returns late can be costly for you?

Experts advise taxpayers to file ITR early and not to wait for the due date. Filing your ITR at the last minute is never a good idea. Many taxpayers rush to file their ITR on the due date, and due to this, the income tax portal may crash because of the high traffic. As a result, you may miss the ITR filing. Although taxpayers can still file ITR after the due date by filing a belated return, this will attract penalty and interest and may also get you a tax notice from the Income Tax Department. Let us know about the consequences of filing a belated return.

What is Belated Return?

When a taxpayer misses the due date of ITR filing, they can file a belated return under section 139(4) of the Income Tax Act. The last date to file a belated return is December 31 of the relevant assessment year.

Consequences of Filing a Belated Return

Here are the disadvantages of filing a belated return.

Late Fee: Taxpayers who file a belated return are liable to pay a late fee under Section 234A. The late fee for belated return is Rs 1,000 for the taxpayers whose gross total income is up to Rs 5 lakh. For total income above Rs 5 lakh, the penalty is Rs 5,000.

Interest: Taxpayers are liable to pay an interest of 1% per month on the outstanding tax amount under section 234A. The interest is calculated from the due date to the date on which the belated return is filed.

Income Tax Notice: Sometimes, the belated filing can also attract income tax notices from the income tax department.

Cannot Carry Forward Losses: Taxpayers cannot carry forward and set off the business and capital losses in the next financial year.

No Option to Choose Old Tax Regime: Taxpayers who miss the original due date of filing ITR will have to file ITR under the new tax regime only. They cannot opt for the old tax regime for filing a belated return.

No Deductions and Exemptions: The tax benefits under sections 10A, 10B, 80-IE, 80-IB, 80-IC, and 80-ID can only be claimed if the ITR is filed before the due date. Filing ITR after the due date can result in the disallowance of these deductions and exemptions.

Scrutiny from Tax Department: If the department finds some mismatches in the belated return, there are chances that your ITR can be scrutinised.

Delayed Refund: If you are eligible to get an income tax refund, then the tax refund might be delayed due to late filing.

Looking at the disadvantages of filing a belated return, it is always suggested to file your return at the earliest to avoid the cost of late filing and penalty. Taxpayers can claim deductions and exemptions under the old tax regime if they file their ITR early. However, filing a belated return will result in losing these tax benefits under the old tax regime. Apart from this, a belated return can get you into legal trouble.