Belated return: Claim refunds, credits, carry forward house property loss

If you file an updated return later, you will have to pay interest and additional tax, and will not be able to claim refunds

With the December 31 deadline fast approaching, individual taxpayers who missed the original income tax return (ITR) filing date are running out of time to set things right. The belated return window offers a final opportunity in the current assessment year to disclose income, pay pending taxes and regularise compliance, albeit at a cost.

   

Failing to act before the deadline can have long-term consequences. While a belated return attracts interest and late fees, tax experts say it is far preferable to not filing at all.

   

What is a belated return?

 

A taxpayer—whether an individual, Hindu Undivided Family (HUF), firm, company, or any other assessee—who fails to file an ITR within the original due date under Section 139(1) of the Income-tax (I-T) Act can file a belated return under Section 139(4).

   

“A belated return may be filed when the return has not been submitted by the original due date. Taxpayers should file a belated return if any income remains to be reported or any tax liability is unpaid. This allows them to voluntarily comply with the law, albeit with applicable consequences,” says Deepashree Shetty, partner – global mobility services, tax and regulatory advisory, BDO India.

   

A belated return can be filed until December 31 of the relevant assessment year or before completion of assessment, whichever is earlier. “A belated return for FY 2024–25 (AY 2025–26) can be filed up to December 31, 2025. This deadline is statutory and cannot be extended,” says Shetty.

   

Claim refunds, tax credits

 

Filing a belated return is far better than not filing at all. “It allows the taxpayer to claim certain losses such as house property loss and unabsorbed depreciation (if the individual has business income), and to seek refunds or credit for taxes already deducted or paid,” says Vishwas Panjiar, founder, SVAS Business Advisors LLP.

   

Failure to file a return altogether can also expose taxpayers to prosecution, including the risk of rigorous imprisonment.

   

Consequences of not filing

 

Taxpayers who miss the December 31, 2025, deadline for FY 2024–25 can file an updated return under Section 139(8A), but only to report additional income and pay the resulting tax.

   

“An updated return can be filed within four years from the end of the relevant assessment year—i.e., by March 31, 2030, for FY 2024–25. This would involve payment of applicable tax and interest, along with an additional tax ranging from 25 per cent to 70 per cent, depending on the delay,” says Sudhakar Sethuraman, partner, Deloitte India.

   

Filing an updated return has certain disadvantages. “An updated return cannot be filed to claim or enhance refunds, even if arising from TDS/TCS (tax deducted at source/tax collected at source) as reflected in Form 26AS. Taxpayers missing the belated return deadline may, therefore, permanently lose their right to claim eligible refunds,” says Sanjoli Maheshwari, executive director, Nangia and Co LLP.

   

Some losses can be carried forward

 

According to the I-T Act, losses under capital gains and profits and gains from business or profession (PGBP) can be carried forward only if the return is filed within the original due date—July 31 or October 31, as applicable.

   

“However, losses from house property and unabsorbed depreciation can be carried forward even if a belated return is filed,” says Maheshwari.

   

Effects on refunds, scrutiny and compliance

 

Filing a belated return has implications beyond penalties. “Refunds are processed later as Section 143(1) processing is delayed, and interest under Section 244A is calculated only from the actual filing date, reducing the payout. Late filing may also raise scrutiny risk due to system-generated alerts,” says Sethuraman.

   

Common mistakes to avoid

 

Taxpayers should take care to ensure accuracy when filing a belated return.

   

“Financial records such as bank statements and invoices should be reviewed and reconciled with Form 26AS and the annual information statement (AIS). Disclosures relating to residential status and foreign assets or financial interests must be made wherever applicable,” says Sethuraman.

   

“Taxpayers should avoid incorrectly claiming the carry forward of capital or business losses, which is not permitted in a belated return,” says Maheshwari. 

Belated return: Penalties and interest

• Late filing fee (Section 234F): ₹5,000; ₹1,000 where total income does not exceed ₹5 lakh
• Interest for delayed filing (Section 234A): 1% per month (or part thereof) on tax payable, from the due date till filing/payment
• Interest for advance tax default (Sections 234B and 234C): Interest on tax payable, as applicable

   

The writer is a Delhi-based independent journalist