ITR Filing Due Date: Know Consequences and Penalties for Delay

It is July, and, as you know, this is a critical month for individual taxpayers. According to the Income Tax Act, the due date for filing income tax returns for the financial year 2023-24 (AY 2024-25) will be July 31.

Taxpayers must ensure that they know the due date as well as the consequences of filing their taxes at the recommended times. Here are some important points regarding the income tax return filing process, why it is necessary to be bound to the due date, and what might happen if it is not possible to file ITR within the specified period.

Difference between a financial year and an assessment year.

The Financial year (FY) or Previous year is the year in which Income is earned. The Assessment Year (AY) is the year starting from 1st April and ending at 31st March and is year immediately succeeding the Previous year. In this year, the assessment of Income earned in Previous year takes place.

For Example for FY 2023-24, the AY is 2024-25.

What is the due date of filing ITR for FY 2023-24

In this financial year (2023-24) for the assessment year (2024-25), the return filing date is July 31, 2024. During this period, you should ensure that you submit your ITR in order to avoid penalties and interest.

What is the rationale behind the fact that you are required to file your ITR before July 31?

Filing your ITR before the due date is crucial for several reasons:

Avoid penalties and interest: Delay leads to penalties and the addition of interest on the amount of tax that is overdue. Simple interest under Section 234A of the I-T (Income-tax) Act is applicable at 1% per month or part thereof from July 31, which is the due date, to the actual date on which the return has been filed or where no return has been filed.

For Example, if your Tax payable is Rs. 20,000. The Due date to file ITR is 31st July, and you file it on 1st August, Interest @ 1% u/s 234A is applicable in this case.

Avoid the late filing fee: In the later part, if you file the return after the due date, you also have access to pay interest on the due taxes as well as the late filing fee. Taxpayers would also be required to pay late fees of Rs. 5,000 under Section 234F if the return is furnished after the due date prescribed under Section 139(1) for such return. Where the total income of such person does not exceed Rs.5 lakh, then such fees shall be limited to Rs.1,000.

Timely refunds: Throughout the year, there could have been several dealings where you have been paid by clients or received a certain amount in the form of income, and tax could have been withheld by the payer in accordance with the provisions of the law. However, in a case where a person is entitled to a tax refund, it means that the delay in filing was done with the aim of gaining a quick refund.

No carry-forward of losses: It is important to note that if one fails to file the ITRs before the expiry of the due date, one is likely to lose the right to carry forward goodies or losses like trading losses, losses from the sale of shares or MF units, etc. to future years. In other words, if you furnish a revised return or a new return thereafter, the losses identified would not allow you to set off other income in the subsequent period.

Facilitate loan approvals: For this reason, it is usually expected in cases where you may require a loan as it acts as proof of income.

Belated tax return

In any case, the annual return must be filed, and if it is not filed before July 31, you can file a late return. A belated return can be filed within three months from the end of the relevant assessment year.

Therefore, if you fail to file the ITR for FY 2023-24 on time i.e. by July 31, 2024, you can file a revised return until December 31, 2024. However, as pointed out above, filing a return after the due date is done in compliance with laws and attracts a penalty, and the taxpayer loses the privilege of transferring forward losses, among other things.

Updated ITR

A new return is an ITR that is filed by the assessee for a tax year other than the one in which the assessment year pertains, while an updated return is a revised return filed by a taxpayer with corrections or additional information for the originally filed and/or belated return. This option enables the taxpayers to make corrections or add some information not previously included. Such revised returns can more often be filed before the due date of completion two years from the end of the concerned assessment year.

Therefore, for the financial year 2023–24, the assessment year is 2024–25. Thus, the revised return for the previous financial year ending on 31.03.2023 can be filed till 31.03.2027.

The catch, of course, is that a new return should not lead to a reduction in taxes paid; in other words, one cannot state a new income contrary to that contained in the initial return and thereby obtain a lower tax bill through an updated return. It can be useful when you need to correct some data in a previously submitted ITR or if you have missed including some income streams in the ITR.