It is very important to file an income tax return. People are satisfied with the fact that their income tax has been paid by them, and now there is no headache for them in an upcoming way, but that is not the end of the process.
To understand the real benefits of paying your income tax, some points should be understood, even after paying your income tax and filing your income tax returns.
Note: Income Tax returns for the Financial year 2024-25 (the Assessment year 2025-26) are to be filed by 16th September 2025.
Interest Loss on the Refunds
When you ask for refunds on your returns when paid any advances, you would be losing some amount of interest, which is 6% right now paid by the income tax department. Any late demand for a refund would make you lose interest, even if you asked for it a day after the elapsed time.
Losses To be Carried Forward
Belated return is not subject to carrying forward the losses except for house property losses. As an official said, “Losses under the following heads of income: Income from business and profession, including speculation business, capital gains, and income from other sources, cannot be carried forward in case a belated return is filed by the taxpayer. The return filer will not be allowed to carry forward these losses even if all taxes have been paid on time if the return is belated.”
When Tax has not been Paid Even after the Due Date
If you have any unpaid tax liability, filing your return after the due date would result in a levy of penal interest @ 1% per month from the due date of filing the income tax return till the actual date of filing under section 234A. This would be a heavy and avoidable payout. What is more, tax authorities can initiate prosecution if the return is delayed beyond the relevant assessment year.
If the Relevant Assessment Year Ends and Still Returns are not filed
If you do not file your tax return within the due date and even by 31st December of the relevant assessment year, but no taxes are due, a penalty of Rs. 5,000 (₹1,000 if income <₹5 lakh) can be levied by the tax authorities.
Section 234F has been inserted for charging the fee for default in furnishing Income Tax returns:
If any assessee fails to furnish a return by the due date specified in section 139(1), then he shall be liable to pay the fee of :
- Rs. 5,000 if the return is furnished after the due date but on or before 31st December of the assessment year.
** If the total income of the person does not exceed Rs. 5,00,000, then the fee payable shall not exceed Rs. 1,000 under section 234F.
** A normal ITR cannot be filed after the end of the relevant assessment year.
- Then the only option is to file an ITR-U (Updated Return) under Section 139(8A), subject to conditions.
- ITR-U can be filed within 48 months from the end of the AY.
- ITR-U cannot be filed to claim a refund or reduce tax liability.
- Additional tax applies (25%, 50%, 60% and 70% of tax + interest).
