Income Tax Returns Filing Due Date: Failing to file income tax returns (ITRs) by July 31 may lead to serious consequences for taxpayers. Most taxpayers are aware that if they miss the ITR filing deadline, it would result in penalty and late fee as they need to file belated ITR in that case. But they are probably not aware of the most serious consequence of not filing the income tax return by the current due date of July 31. Besides late fee and penalties, the most serious consequence for taxpayers is that they would be losing the benefits associated with the old tax regime, if they do not file their ITR by July 31.
As around 5.5 crore taxpayers have filed ITRs already, it is very likely that the government may not extend the income tax return filing deadline of July 31. If we compare the year-on-year data so far, more taxpayers have filed ITRs this year than in the previous Assessment Year. Last year, till July 31, around 6.77 crore ITRs were filed. With late filing of returns, this number rose to over 8.18 crore.
Now as the July 31 deadline for ITR filing approaches, taxpayers must be wondering about various consequences of failing to meet the ITR filing deadline for AY 2024-25. Besides late fee and penalties, the most serious consequence for taxpayers is that they would be losing the benefits associated with the old tax regime, if they do not file ITR by July 31.
So as a taxpayer, what do you stand to lose if you fail to file income tax return before July 31?
Old Tax Regime benefits to be taken away:
The most serious penalty for a taxpayer in case of failure to meet the July 31 ITR deadline is that the individual will not be able to file income tax return under the old tax regime. Since the new tax regime is the default for this financial year, failing to meet the deadline means the taxpayer will lose the ability to claim exemptions and deductions against investments in tax-saving instruments.
After the July 31 deadline ends, taxpayers will automatically be shifted to the new tax regime, which does not offer the benefits available under the old regime. This shift could lead to higher tax liabilities, as the new regime lacks the exemptions and deductions that many taxpayers rely on to reduce their taxable income.
For salaried taxpayers with no business income who have opted for the old tax regime, filing the ITR before the due date is crucial. Missing the deadline means you will not be able to opt out of the default new tax regime, potentially resulting in a more costly tax situation due to the absence of deductions and exemptions in the new system.
Late filing fee on missing the July 31 deadline
Missing the July 31 deadline for filing your income tax return (ITR) can lead to the imposition of a late filing fee by the Income Tax Department. Under Section 234F of the Income Tax (I-T) Act, a late filing fee of Rs 5,000 can be levied. However, if your income is below Rs 5 lakh, this fee is reduced to Rs 1,000.
In addition to the late filing fee, taxpayers with outstanding tax liabilities will have to pay interest charges. As per Section 234A of the Income Tax Act, an interest rate of 1% per month is applied to the outstanding tax amount from the due date. This means that the longer you delay filing your return, the more interest you will accumulate, increasing your overall tax liability. Therefore, it is crucial to file your ITR on time to avoid these additional costs.