Does missing July 31 deadline mean losing out on old tax regime benefits? The deadline for filing income tax returns is July 31. Taxpayers now have only 3 days left to file returns for the financial year 2023-24 i.e. assessment year 2024-24. If you have not done this important work yet, then complete it as soon as possible. Otherwise, apart from paying extra charges and penalty, you may have to suffer many types of serious financial losses.
Most people are aware that taxpayers have to pay extra charges for delay in filing ITR after July 31. But very few people are aware of the biggest loss caused by belated ITR filing after filing the income tax return after the deadline. The deadline for filing tax returns is very close. In such a situation, you can save yourself from the biggest loss by filing tax returns without waiting for the deadline. Let’s know.
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Will not be able to avail the benefits of old tax regime
The new tax regime has been made the default tax regime from the financial year 2023-24. Still, taxpayers have the option to select the old tax regime. But if you file ITR late, then you do not get the exemption to select the old tax regime. That is, you will be forced to pay tax according to the new tax regime. This is a big disadvantage of missing the deadline to file ITR. This is because in the new tax regime, the benefit of most of the tax-saving deductions and exemptions is not available. Whereas in the old tax regime, there are many benefits including tax-saving investments, which reduce the tax liability. Therefore, if you had done your financial planning according to the old tax regime and now miss the deadline to file ITR, then you may have to pay more tax while filing the return late.
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We will tell you how much penalty will be charged for filing this ITR late.
First of all, let us know how much penalty is to be paid for filing income tax return late. Under section 234F of Income Tax Act 1961, a penalty of up to Rs 5000 may have to be paid for filing income tax return after the deadline. However, for taxpayers whose taxable income is up to Rs 5 lakh, the maximum penalty for late filing has been fixed at Rs 1000 only. But it should also be kept in mind that those who are required to file return despite having zero tax liability may also have to pay penalty for filing return late.
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Losses cannot be carried forward
Under the rules related to income tax, taxpayers can carry forward the capital loss incurred in a single year for up to 8 financial years. This helps a lot in reducing the tax liability applicable on future capital gains. But taxpayers who file ITR late cannot take advantage of carrying forward the capital loss. That is, if they have incurred any loss, they will not be able to reduce their tax liability by adjusting it with future profits. However, loss from house property has been considered an exception to this.
Also read : ITR Filing: What will happen if you are unable to file ITR by 31st July? Details of extra charges, late fees and penalty
Interest is charged on outstanding tax liability
Apart from the penalty for filing income tax return late, one also has to pay penal interest as a penalty on the outstanding tax liability. If any tax is due at the time of filing the return, then interest at the rate of 1 percent per month has to be paid on it under section 234A of the Income Tax Act. If any advance tax is due, then interest at the rate of 1 percent per month is also charged on it under section 234B and 234C. This penal interest has to be paid from April 1 to the date of filing ITR.
Also read : ITR filing: If you miss the deadline for income tax return, it will cost you heavily, not just the penalty, there are many other disadvantages
Income tax refund will also be received late
For taxpayers who know that they can get income tax refund this year, it is better to file the return as soon as possible. Because the sooner they file the return, the sooner they will get their refund money. On the other hand, filing the return late means a long wait for the refund, because it will be processed only after filing the ITR. And only then will the refund be available. If any interest is to be received on the refund, then that too will be less if the return is filed late. This is because the calculation of interest on income tax refund will be done from the date of verification of ITR to the date of processing of ITR by the Income Tax Department. On the other hand, if ITR is filed on time, then the calculation of interest on the refund is done from April 1 to the date of processing of ITR.
