Ignoring the ITR deadline? Experts explain the cost beyond the ₹5,000 fee

Experts explain who pays a Rs 1,000 or Rs 5,000 late fee and why filing late can cost much more than that

If you miss the July 31 income tax return (ITR) deadline, you can still file a belated return, but it could be expensive. Apart from a late filing fee of up to Rs 5,000, taxpayers may also have to pay interest on unpaid taxes, lose the benefit of carrying forward certain losses, and face delays in receiving refunds.

 

Experts say many taxpayers mistakenly believe the late fee depends on their gross income. In reality, the amount is linked to “total income” after eligible deductions, while a separate test determines whether a person is required to file an ITR at all.

 

How much is the late filing fee?

Under Section 234F of the Income Tax Act, taxpayers filing a belated return for Assessment Year (AY) 2026-27 may have to pay:

 

Rs 1,000 if total income is up to Rs 5 lakh

 

Rs 5,000 if total income exceeds Rs 5 lakh

 

Nil, if the taxpayer was not required to file an ITR because income was below the basic exemption limit and no mandatory filing conditions applied

 

Deeksha Kankani Dhoot, chartered accountant and founder of Deeksha Kankani & Associates, said the late filing fee is determined by total taxable income after eligible deductions, but whether a taxpayer is liable to pay the fee depends on whether their gross total income exceeded the basic exemption limit.

 

Dhoot gave two examples. A taxpayer with gross income of Rs 6.5 lakh who claims Rs 50,000 in deductions has a taxable income of Rs 6 lakh and would have to pay a Rs 5,000 late fee if the return is filed after the due date. However, someone with gross income of Rs 5.2 lakh and deductions of Rs 40,000 ends up with taxable income of Rs 4.8 lakh and would pay only Rs 1,000 despite having gross income above Rs 5 lakh.

 

Mihir Tanna, associate director of direct tax at SK Patodia & Associate LLP, gave a similar illustration. If a salaried taxpayer’s total income after deductions is Rs 4.8 lakh, the late fee is Rs 1,000. If the income rises to Rs 5.2 lakh, the fee increases to Rs 5,000.

 

Don't confuse total income with gross income

 

According to experts, confusion between gross income and total income is among the most common mistakes taxpayers make.

 

Deepak Ukidave, chartered accountant and adjunct faculty at K J Somaiya Institute of Management, explained that total income broadly refers to earnings from all heads of income, while taxable income is the amount left after claiming eligible deductions and exemptions on which tax is ultimately payable.

 

Sudhir Kaushik, chief executive officer of TaxSpanner, said taxpayers should not use gross salary or gross receipts to determine the applicable late fee. For example, if a person’s gross salary is Rs 6.2 lakh but deductions reduce total income to Rs 4.9 lakh, the late filing fee would generally be Rs 1,000. If total income after deductions is Rs 5.2 lakh, the fee becomes Rs 5,000.

 

The late fee is only one part of the cost

 

Experts caution that the Rs 1,000 or Rs 5,000 fee may not be the biggest financial consequence of missing the deadline.

 

Dhoot said taxpayers with unpaid tax liabilities must also pay interest under Section 234A at 1 per cent per month or part thereof from the due date until the return is filed. They may also lose the ability to carry forward business, capital and certain other losses, besides missing out on interest payable on delayed tax refunds.

 

She cited the example of a taxpayer with taxable income of Rs 5.5 lakh and an unpaid tax liability of Rs 10,000 who files the return four months late. In addition to the Rs 5,000 late filing fee, the taxpayer would pay Rs 400 as interest under Section 234A.

 

Tanna said a taxpayer with an outstanding tax liability of Rs 50,000 who files three months late would pay Rs 1,500 as interest. He added that taxpayers filing belated returns can still claim refunds, but the interest on such refunds may be reduced because the delay is attributable to the taxpayer.

 

For investors, the impact could be much larger than the late fee itself.

 

Kaushik said taxpayers who incur capital losses or business losses and file a belated return may lose the right to carry those losses forward and set them off against future income. "For taxpayers with share market losses, this can be a bigger loss than the late filing fee itself," he said.

 

Ukidave also noted that filing late could delay refund processing and, in some cases, affect financial credibility, as timely ITR filing is often sought during loan or visa applications.

 

Missed the deadline? Here's what to do

Experts advise taxpayers not to wait until the last day of the belated return window. A belated return for AY 2026-27 can be filed until December 31, 2026, or before assessment is completed, whichever is earlier.

 

They recommend the following steps:

 

• Collect Form 16, AIS, TIS, Form 26AS, bank interest and capital gains details.
• Calculate any outstanding tax, interest and the applicable late filing fee.
• Pay the amount using the e-Pay Tax facility.
• File the return by selecting "Belated Return" under Section 139(4).
• Complete e-verification immediately, as an unverified return is treated as invalid.

 

Experts also advise taxpayers to avoid common mistakes such as selecting the wrong assessment year or ITR form, ignoring AIS or Form 26AS mismatches, omitting bank interest or capital gains, claiming unsupported deductions, and forgetting to e-verify the return after filing.