Late ITR after Sept 15: Why the hit is bigger than just a penalty fee

From losing the old regime option to higher interest outgo, here's how a delayed ITR beyond September 15 can shrink your savings.

Filing your income tax return (ITR) by the September 15 deadline is not just about ticking off a compliance box. Missing it can mean more than a late fee, it can snowball into interest outgo, lost tax benefits, and even trouble with future financial planning, says Niyati Shah, chartered accountant, vertical head, personal tax at 1 Finance.

 

The late-filing fee: Section 234F

Under Section 234F of the Income Tax Act, a mandatory penalty applies if you miss the due date:

 

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

 

“This penalty is levied even if all your tax is already deducted at source (TDS) and no extra tax is due,” explains Shah.

 

Extra interest charges under Sections 234A, 234B and 234C

It does not stop at the late fee. Delayed returns attract interest on unpaid or underpaid taxes:

 

Section 234A: 1 per cent per month on unpaid tax from 16 September till filing

 

Section 234B: 1 per cent per month from 1 April if advance tax paid is less than 90 per cent of liability

 

Section 234C: 1 per cent per month on missed or underpaid advance tax instalments

 

“For taxpayers with significant liabilities, even a short delay can inflate the final tax bill substantially,” notes Shah.

 

Other hidden setbacks

Late filing also carries broader financial consequences:

 

Refunds delayed: Processing and crediting of refunds may take longer.

 

Loss carry-forward blocked: Business income and capital gains losses cannot be carried forward. Only house property loss and depreciation carry-forward is allowed.

 

No old tax regime option: A late filer is mandatorily shifted to the new regime, even if the old one was more tax-efficient.

 

Loan and visa impact: Banks, NBFCs, and embassies often ask for ITR proofs. A late return may complicate approvals and affect creditworthiness.

 

A real-world example

Consider a salaried individual earning ~12 lakh. If he files on 1 October instead of 15 September, Shah illustrates, here’s how the costs add up:

 

Tax liability (new regime): Rs 83,200

 

Late fee (234F): Rs 5,000

 

Interest (234A): Rs 832

 

Interest (234B): Rs 4,992

 

Interest (234C): Rs 4,202

 

Total outgo: Rs 98,226

 

“In addition, he could face delayed refunds and may lose the ability to carry forward certain losses,” warns Shah.

 

The bottom line

Shah sums it up, “Delaying your ITR beyond September 15 triggers not just penalties, but also loss of tax flexibility and cash flow setbacks. Timely filing is no longer optional, it’s a financial safeguard.”