Belated ITR Filing: 5 disadvantages to face along with penalties
Belated ITR Filing: The deadline for filing Income Tax Returns (ITR) for the financial year 2023-24 was July 31. However, you can still file a belated return under Section 139(4) of the Income Tax Act, 1961, until December 31. This comes with a penalty: a late fee of Rs 1,000 for annual incomes below Rs 5 lakh, and up to Rs 5,000 for incomes above Rs 5 lakh. Besides the penalty, there are several disadvantages to filing a belated ITR that many people may not be aware of. Here's what you need to know:
Inability to Carry Forward Losses
If you file a belated ITR, you cannot carry forward any losses to the next year, unlike with a timely return, where losses can be carried forward for up to 8 years.
No Interest on Refunds
Those who file belated ITRs are not entitled to interest on their refunds. Normally, taxpayers receive 0.5 per cent interest per month on the refund amount, calculated from the date of filing to the date of refund.
Payment of Penal Interest
If there are any taxes due at the time of filing a belated ITR, penal interest is charged at 1 per cent per month. This applies under Sections 234A, 234B, and 234C, depending on the nature of the tax due.
Delayed Refunds
Filing a belated income tax return can delay the processing of your return, which in turn delays any tax refunds.
No Option for Old Tax Regime
With a belated ITR, you cannot choose the Old Tax Regime. You must file under the New Tax Regime, which might not be advantageous for those looking to save tax through deductions available in the Old Regime.