Missed the July 31 ITR Deadline? All You Need to Know About Penalties and Filing a Belated Return

The deadline for filing Income Tax Returns (ITR) for the Financial Year 2023-24 has passed as of July 31. Despite expectations, the Income Tax Department did not extend the deadline, meaning taxpayers who missed this cut-off must now navigate penalties and additional charges when filing a belated return, which is permissible until December 31, 2024.

Filing an ITR after the deadline, referred to as a belated return under section 139(4) of the Income Tax Act, incurs several penalties and potential fines. Moreover, such delays may also trigger audits from the IT department, adding further inconvenience and scrutiny for the taxpayer.

Penalties for Missing the ITR Deadline

The penalties for filing a belated ITR depend on the taxpayer's income level:

• Net Taxable Income Above ₹5 Lakhs: Taxpayers in this bracket face a penalty of up to ₹5,000 for filing a belated return.
• Net Taxable Income Below ₹5 Lakhs: For these individuals, the penalty is capped at ₹1,000.

Consequences of Missing the ITR Deadline

Aside from monetary penalties, there are significant disadvantages to filing a belated ITR:

1. New Tax Regime: Missing the ITR deadline forces taxpayers to adopt the new tax regime automatically. This regime offers limited deductions and exemptions compared to the old tax regime, potentially resulting in higher tax liabilities.
2. Carry Forward of Losses: Late ITR filing disallows the carry forward of losses from investment tools such as stocks, mutual funds, and properties. This restriction can lead to increased tax burdens in future financial years.

Exemptions and Refunds

Individuals whose taxable income falls below the basic exemption limit can still file their ITR to claim refunds. These taxpayers are exempt from penalties for late filing, allowing them to recover any due refunds without incurring extra costs.

While the option to file a belated return provides a grace period until December 31, 2024, it is advisable to file your ITR within the deadline to avoid penalties and other disadvantages. Taxpayers should take this opportunity to ensure their financial records are in order and consult with tax professionals if needed to mitigate any negative impacts from delayed filings.