Missing the July 31 deadline for filing Income Tax Returns (ITR) in India can lead to several financial and legal repercussions, experts warn. The Income Tax Act mandates that individuals and businesses submit their returns by this date each year. Failure to do so can result in penalties, interest charges, and other consequences.
Taxpayers who fail to meet the deadline may face penalties and interest charges. Under Section 234F of the Income Tax Act, those who file after July 31 but before December 31, 2025, could incur a late filing fee of up to Rs 5,000. If the return is filed after December 31, the penalty can increase to Rs 10,000. However, for individuals with total income up to Rs 5 lakh, the penalty is capped at Rs 1,000.
In addition to penalties, interest under Section 234A will be levied on any unpaid tax amount. This interest accrues at one percent per month or part of a month from the due date until the return is filed.
Taxpayers expecting a refund may also lose out on interest that accrues during the delay. Furthermore, missing the deadline means losing the ability to carry forward losses under most income heads, except house property.
Late filing also shortens the time available for making corrections or revisions to the return. Typically, the deadline for revising an ITR is at the end of the assessment year, but filing late compresses this timeline.
Options for Late Filers
If the deadline is missed, taxpayers have options to rectify their filings:
Belated Return: A belated return can be filed under Section 139(4) of the Income Tax Act until December 31, 2025. While this allows for compliance, it involves penalties and interest charges, and the ability to carry forward losses, except those related to house property, is lost.
ITR-U (Updated Return): Introduced as part of the Finance Act 2022, the ITR-U allows taxpayers to update their returns within two years from the end of the relevant assessment year. This facility helps correct omissions or errors in original or belated returns. However, filing an updated return incurs an additional tax, which is 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.