Last day to file returns: What happens if you miss your ITR deadline today

If you miss the  deadline to file your tax returns today, you still have the option to file a belated return until December 31 but you will have to pay a late filing fee.

The amount of the late fee will vary depending on your total income. For individuals with a total income exceeding Rs 5 lakh per annum, the late fee is Rs 5,000.

According to the Finance Act 2021 amendment, you can file your belated IT return anytime on or before three months before the end of the relevant Assessment Year (AY). For Example, for the AY 2023-24, the timeline to file a belated return is on or before 31 December 2023 (if income tax authorities do not complete the assessment on their own). 

Belated return:
Return of income which has not been furnished on or before the due date specified under section 139(1) is called belated return. Belated return of income is furnished under section 139(4).
 

Any person who has not furnished a return of income within the time period allowed under section 139(1) or within the time period allowed under a notice issued under section 142(1), may furnish return for any previous year 

- at any time 3 months before the end of the relevant assessment year or before completion of the assessment, whichever is earlier.           

Also Read: ITR filing 2023: What happens if you miss the July 31 deadline to file ITR?

Penalty for filing belated return        
 

However, a belated return attracts late filing fees under section 234F. 
 

As per section 234F, late filing fees of Rs.5,000 shall be payable if return furnished after due date specified under section 139(1). However amount of late filing fees to be paid shall be Rs.1,000, if the total income of the person does not exceed Rs.5 lakh.

"For instance, the due date for filing returns for FY 2022-2023 is 31st July 2023. If you miss filing ITR by the due date, you can file the belated return by 31st December 2023. However, you are required to pay the penalty for late filing. The maximum penalty of Rs 5,000 will be levied if you file your ITR after the due date of 31st July 2023 but before 31st December 2023 However, there is a relief given to small taxpayers – if their total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1,000," explained ClearTax.

Also Read: Filing ITR? Don't forget to declare your income from other sources

There is even a tax due

Apart from just the late fees, if there is tax due at your end, the due amount will attract additional interest till you make the payment.

Taxpayers are liable to pay simple interest u/s 234A of the Income Tax Act at the rate of 1 percent for every month or part of a month, commencing from the date immediately following the due date i.e. July 31 to the actual date of furnishing of the return.

You may land in jail too

The government can  initiate prosecution against the salaried individuals who have missed filing ITR by 31st December 2023.

The existing income tax rules prescribe a minimum sentence of 6 months of imprisonment and a maximum sentence of 7 years of imprisonment.

" Non-filing of tax returns may be viewed as tax evasion by income tax authorities. Under Section 276CC of the Income Tax Act, failing to file an income tax return could lead to six months to seven years imprisonment. However, the Finance Act 2022 has amended the rules, and there will be no such prosecution from AY 2022-23 if you file an updated return within the time provided in Section 139(8A), as per HDFC Bank," said Swati Jain, CA and Strategic Business Advisor at Arihant Capital  

You don't get to carry forward losses

Non-filing of return till July 31 will also lead to the loss of carry forward of losses to future years. Only house property loss can be carried forward in case of late filing.

Also Read: What are the mistakes that can lead to defective ITR? How do I rectify it?

Loss of interest on refunds

In case you’re entitled to receive a refund from the government for excess taxes paid, you must file the returns before the due date to receive your refund at the earliest. An individual is eligible for interest on income tax refund at the rate of 0.5% per month. However, if an individual files belated ITR to claim an income tax refund, then no interest is payable on the income tax refund.

Reduced Time for Rectification:
Filing the ITR after the due date reduces the time available for you to rectify any errors or discrepancies in your tax return, which could lead to further penalties if not corrected promptly, explained Raghuram Trikutam, CEO at Descrypt,a technology platform for crypto taxation.

 Increased Scrutiny:
Late filers may attract greater scrutiny from the Income Tax Department, and the chances of being selected for a tax audit or investigation may increase, added Trikutam.

Let's summarise the disadvantages of a belated return:

If you file a belated ITR, you are not eligible to carry forward the losses on income from capital gain, business and speculation. You can only adjust the losses from the sale of house property.

The tax refund is only paid if the return is filed and duly verified. You are eligible for the 0.5 per cent interest per month on the refund amount only if you file your returns by the actual due date, which is July 31, 2023.

If any dues are pending on the taxpayer's part, they will be liable to pay penal interest  of one per cent per month on it from the last day of filing the ITR. 

File a revised return instead of a belated return

"In a race against the clock, it is advisable that the taxpayer files the ITR encompassing the accurate information and details to the best extent possible, before the deadline and thereafter may file a revised return encompassing the missed out details such as non-reporting of certain streams of income or claiming certain deductions. Filing a revised return is recommended over a filing a belated return to ensure that the taxpayer’s losses are carried forward and late fees, penal interest are  avoided.

Alternately, in a worst case scenario, one may file a belated return with applicable late fees, penal interest and lapse of carry forward of losses (except losses against house property)," said  Keshav Singhania, Private Client Leader, Singhania & Co. LLP