Tax filing deadline to be extended till Jan 15 for some: Know who benefits

Bombay High Court asks CBDT to give more time for work after petition against software update

The Bombay High Court has asked the Central Board of Direct Taxes (CBDT) to extend the deadline for filing revised and belated Income Tax Returns (ITRs) to January 15, 2025. The extension will be for taxpayers eligible for the Section 87A tax rebate.

 

What is Section 87A

 

The section provides relief to individual taxpayers, especially those with lower incomes. It offers rebate to individuals whose total taxable income is up to Rs 5 lakh under the old tax regime and Rs 7 lakh under the new regime.

 

What is the case

 

A Public Interest Litigation (PIL) was filed by The Chamber of Tax Consultants, challenging the disabling of Section 87A rebate claims via the filing utility.

 

 

The plea said that the software update on July 5 arbitrarily prevented taxpayers from availing of the rebate under Section 87A of the Income Tax Act, 1961. It also challenged the Income Tax department's modifications to the utility software used for filing returns for the assessment year (AY) 2024-25.

 

High Court order

 

“…Central Board of Direct Taxes is hereby directed to forthwith issue requisite notification under Section 119 of the Act extending the due date for e-filing of the income-tax returns in relation to the assessees who are required to file a return of income by December 31, 2024, at least to January 15,2025. This extension is to ensure that all taxpayers eligible for the rebate under Section 87A are afforded the opportunity to exercise their statutory rights without facing procedural impediments,” the High Court said.

 

What if you miss the new deadline?

 

“Missing the deadline for filing your belated Income Tax Return (ITR) for FY 2023-24 can have several consequences. Penalties for late filing may increase significantly, and you could lose certain benefits, such as the ability to carry forward losses,” said Amit Bansal, Partner, Singhania & Co.

 

Kunal Savani, partner at Cyril Amarchand Mangaldas, explained the points to keep in mind while filing belated Income Tax returm.

 

While filing a belated return is allowed under the Income Tax Act, this comes with certain added costs. Firstly, a late fee of Rs 5,000 will be levied under Section 234F of the IT Act while filing a belated return. If the total income is less than Rs 5 lakh, the late filing fee shall be reduced to Rs 1,000. However, if the income is less than the taxable limit, no late fee shall be levied. It is pertinent to note that the amount of penalty for late income tax return filing will be Rs 10,000 if a taxpayer furnishes return after December 31, 2024. Further, under Section 234A, a simple interest of 1 per cent per month will be charged for each month past the deadline.  

 

Additionally, while submitting a belated return is a way to meet the tax obligations, it may limit the taxpayer’s ability to claim certain tax benefits. For instance, while filing a belated return, losses arising from business/profession and capital gains are not eligible for carry forward and specific deductions are prohibited under different sections such as 80IA, 80IB of the IT Act. Another important point to note is that it is not permissible to switch tax regimes while filing a belated return.