Failure to file ITRs on time may result in penalties and fines and attract audits from the IT department.
An income tax return (ITR) filed
According to section 139 (4) of the Income Tax Act, an income tax return (ITR) filed after the due date of July 31 is known as a belated return. Taxpayers who miss the deadline for filing a return can opt to file a belated return by December 31 of the relevant assessment year.
Penalties charged for missing ITR deadline
Taxpayers have to pay penalties for filing their ITR based on their income level.
-Taxpayers with net taxable income above ₹5 lakhs for FY24 can file a belated tax return penalty of up to ₹5,000.
Whereas, for the people, whose net taxable income is below ₹5 lakhs for the financial year (FY24), penalty on belated ITR is limited to ₹1,000.
What happens when one misses filing an ITR on time?
In addition to facing penalties on belated ITR filing, income taxpayers also end up getting certain advantages and privileges that they used to have before the deadline. Following are the two major disadvantages (apart from penalties) for individuals filing belated ITR.
-New Tax regime: Income taxpayers have the option to file taxes based on new and old tax regimes; however, failing to file ITR within the deadline deprives individuals of the freedom of choosing their regime as they are automatically shifted to the new tax regime. Unlike old tax regime, new tax regime lacks deductions and also offers limited exemptions.
Carry forward of losses: Filing ITR after the deadline doesn’t let individuals carry forward their losses incurred from investment tools like stocks, mutual funds, properties, etc. Therefore, they are subjected to higher taxes in the future.
Individuals whose taxable income is below the basic exemption limitcan file the ITR to claim a refund, as they are exempt from penalties for late filing.
