Will Budget 2025 Extend the Income Tax Return Filing Deadline for Taxpayers?

Union Finance Minister Nirmala Sitharaman will present the eighth union budget on 1 February 2025, six months after when the last Budget presented was in July 2024

Budget 2025: Will ITR Deadline Be Extended?

Shivani Verma | Jan 31, 2025 |

Will Budget 2025 Extend the Income Tax Return Filing Deadline for Taxpayers?

Will Budget 2025 Extend the Income Tax Return Filing Deadline for Taxpayers?

Union Finance Minister Nirmala Sitharaman will present the eighth union budget on 1 February 2025, six months after when the last Budget presented was in July 2024. In the July Budget, it was attempted to make capital gains tax calculation easier; even some relief to salaried persons was given in their income tax.

In addition to taxpayers who are hoping for tax breaks, there has been a long-standing request for more time to file income tax returns after the end of the financial year. Now, the deadline to file the original tax return is July 31 of the Assessment Year and the deadline to file a revised or late return is December 31 of the same year. On the other hand income tax department has worked on automating the tax return filing process, but the short filing deadlines have only made it tougher for taxpayers.

Here are some of these challenges explained below

Extend the due date for filing the original ITR:

Employers must provide Form 16 by June 15 of the assessment year for salaried taxpayers. This means these taxpayers only have about 45 days to prepare and file their income tax return.

There are several activities that have to be calculated and considered before filling ITR like bank account statement reconciliation, analyzing joint income with a spouse, gathering Form 26AS, the Annual Information Statement (AIS), and arranging funds to pay any remaining taxes. etc. For capital gains calculation, information may have to be gathered from various sources, such as the sale of shares, mutual funds, bonds, properties, and more.

Taxpayers, who are common residents in India, must disclose all their overseas income and wealth. Many countries have tax periods other than what is being required for taxpayers in India’s fiscal year. Even in countries that have the same financial year, tax returns are usually not available before July 31. It would help these taxpayers, especially those who need to claim credit for foreign taxes if extra time were given to file income tax returns.

If you file your Income Tax Return (ITR) on time, by July 31, you can choose between the old and new tax regimes. But if you miss this deadline and file a belated return, you may have to pay extra tax. This is because you will not be able to choose the old tax regime. Also, when filing late, you can’t carry forward any losses for the year, except for house property losses. On top of that, you will have to pay extra interest on any unpaid tax and a late filing fee of up to Rs. 5,000, which can be a big financial burden for some taxpayers.

Given the above, the deadline for filing the original return should be extended to at least August 31 instead of July 31.

Extend the due date for filing revised and belated return:

In India, taxpayers who are Resident and Ordinarily Resident (ROR) are taxed on their global income and must report their global assets and liabilities in their tax returns. Some countries, like the US, Canada, and Singapore, follow the calendar year for taxes. It can be tough to gather income and asset details from these countries before the filing deadline.

If you miss the deadline for filing a revised or belated return, you can only file an updated tax return. But keep in mind, this comes with penalties. You can only file an updated return if you owe more tax. It can’t be filed if it reduces your tax amount, increases your refund, or makes any other changes that result in paying less tax.

Taxpayers can file an updated tax return within two years after the assessment year ends. For the financial year 2023-24, the deadline to file a revised or belated return is December 31, 2024. From April 1, 2025, to March 31, 2027, new returns are filed. This translates into no filing of tax returns for the period between January 1, 2025, and March 31, 2025. The taxpayers may have to pay extra interest on such an amount pending during this period if any taxes are unpaid.

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