How to file 'belated' ITR: Benefits, limitations, and step-by-step guide

If tax dues are pending while filing a belated ITR, a penal interest of 1 per cent per month will be levied on the due amount

The deadline for filing Income Tax returns (ITR) ends on July 31, likely prompting several people to scramble and complete the process. The deadline should not be missed but if you do for some reason the Income Tax Department offers a provision for filing what it calls belated returns.

 

What is a belated return?

 

This return is filed under Section 139(4) of the Income Tax Act, 1961. “In case of an individual taxpayer who is not required to get their accounts audited, the due date to file tax return for FY 2023-24 is July 31, 2024. For any reason, taxpayers miss this timeline, he can file a belated return on or before December 31, 2024. The belated return will attract interest under section 234A and 234B on unpaid tax liability along with late fees. In case, a taxpayer misses the timeline of belated return also, he can file updated tax return,” said Gopal Bohra, partner, direct tax, at N A Shah Associates LLP.

 

 

“Updated tax return can be filed within two years from the end of the relevant assessment year - for example updated tax return of March 2022 (A.Y. 2022-23) can be filed up to March 31, 2025. However, note that an updated tax return within one year from the end of the relevant assessment year will be filed with additional tax of 25 per cent on total tax and interest and beyond one year but before 2 years with additional tax of 50 per cent on total tax and interest,” he said.

 

What are the limitations of filing a belated return?

 

Losses from business/profession and capital gains cannot be carried forward. However, losses from 'house property' and unabsorbed depreciation can still be carried forward.

 

Certain deductions are disallowed under sections 10A, 10B, 80IA, 80IB, 80IC, 80ID, and 80IE.

 

Taxpayers may lose interest on refunds under Section 244A if the delay is due to late filing.

 

Switching tax regimes is not allowed when filing a belated return. People who file their return on or before July 31 are allowed to change their tax regimes.

 

Filing a belated return helps fulfil your tax obligation may restrict your ability to claim certain benefits and may result in additional penalties.

 

Why filing a belated return is crucial?

 

Despite the drawbacks, filing a belated return is far better than not filing at all. Here's why:

 

Legal compliance: Filing returns is a legal obligation for individuals meeting certain income thresholds.

 

Avoiding hefty penalties: People who don’t file returns may get a notice from the Income Tax Department and they may be asked to pay penalties in some cases.

 

Documentation for financial transactions: ITRs serve as important financial documents for various purposes like visa applications, loan approvals, and property transactions.

 

Peace of mind: Staying compliant with tax laws provides peace of mind and prevents future complications.

 

How to file a belated return

 

Access your account on the Income Tax e-filing website.

 

Click on ‘e-File’ and choose ‘Income Tax Returns’, then select ‘File Income Tax Return’.

 

Select the relevant assessment year for which you are filing the belated return.

 

Choose the appropriate Income Tax Return (ITR) form based on your income sources.

 

Ensure all your personal details are accurate in the ‘Personal Information’ section.

 

Select Section 139(4): Scroll down to the filing section and select the option for belated return under Section 139(4).

 

 Provide Income Details: Fill in your income details under the relevant heads.

 

Tax Payment: If applicable, proceed to make any necessary tax payments.

 

Complete the filing process by verifying your return electronically. This step is crucial as the return will not be processed without e-verification.