If you have missed filing your income tax return in July, then you can still file a belated income tax return till December 31, 2022 under Section 139 (4) of the Income Tax Act, 1961, but subject to completion of the assessment.

Though filing a belated income tax return is still better than not filing one, some disadvantages remain.

Here’s what you will gain by filing a belated income tax return and what you stand to lose by not filing any return at all.

What Is A Belated ITR?

If someone has not filed his/her original return within the prescribed deadline (July 31, 2022) then he/she cannot file a revised return, and the only option he/she will now have is to file a belated return. The due date for filing a belated return is on or before the end of the relevant assessment year, which for this year, is December 31, 2022.

Says Archit Gupta, founder and CEO, Clear: “If no ITR is filed, then the Income Tax Department may start an assessment procedure against the person, which could lead to hefty amount of penalty charged against the person. Therefore, it is always advisable to file a return of income, even if it is a belated return.”

What Can One Gain By Filing A Belated Return

A belated ITR is similar to an original ITR, and so the benefits of filing an ITR or a belated ITR is the same. 

A belated return will allow the assessee to carry forward his/her loss from house property. That said, other losses under the head profits and gains from business and profession or capital gains head are not allowed to be carried forward in a belated return.

Gupta adds: “Despite earning an income if someone has not filed their income tax return or belated income tax return, and this continues for two consecutive years, then tax is deducted on income other than salary at twice the rate.”

One should note that a belated return can be revised and filed again, but the deadline shall remain the same i.e., December 31, 2022.

So in a gist, if someone has missed filing their original return and has earned a taxable income, then they should consult their tax advisor and file a belated return. Belated return will attract two monetary charges.

  • Interest:1 per cent per month on the unpaid taxes under section 234A of the Income-tax Act, 1961.
  • Late Fees: Rs 1,000 for income below Rs 5 lakh and Rs 5,000 for incomes above Rs 5 lakh
  • Where the income is below the taxable limit, then no late fees is charged.

Mihir Tanna, associate director of SK Patodia and Associates, a Mumbai-based chartered accountancy firm, said that If a person is required to file ITR within a specified due date, do not file the same should file belated ITR. In such a case certain additional rules will be applicable like the taxpayer will be liable to pay additional interest (if tax liability is not discharged by way of TDS and advance tax); additional late filing fee will be charged, few losses cannot be carried forward.

“If Person who is required to file ITR, misses the deadline of original return; should file a belated ITR to avoid penal consequences of non disclosure of income (which can be 50 per cent of tax payable),” Tanna further added.  

What Does One Lose Out On By Filing A Belated Return?

One of the biggest features which an assessee will miss out by filing a belated return is new tax regime switching. The option to file tax returns under the new tax regime is available only for those who file their ITR within the due date.

“If one has not filed income tax return before July 31, 2022, there is last chance to file it before December 31, 2022 as belated return. This ITR will not be considered original ITR. In belated return, one can not opt for new tax regime. In belated return, one cannot change the tax regime. If one has salary income and already filed ITR before July 31, 2022, then he/she can change the regime by filing revised return,” said Sujit Bangar, founder, TaxBuddy.com, a tax filing assistance company.

Another aspect, which an assessee will miss out on is the payment of interest on tax refunds. According to Section 244A, the income tax department pays an interest on tax refunds, subject to certain conditions, and only if the income tax return is filed and verified.

However, if one is filing a belated return, then no interest is payable on such refund.

To sum it up, while a belated return has some disadvantages, like no payment of interest on refund amount, no carrying forward of other loss apart from house property, interest and late penalty charges, filing it is still beneficial, especially for those who want to take advantage of an ITR record, but have below exemption limit income, in which case, the late fees/charges are not applicable.

Also to be noted is that a person who has income not exceeding the basic exemption before claiming any deduction under chapter VI A (80C/ 80D others) of the Income Tax Act, 1961 is not legally obligated to file the return of income.

“However, if he wishes, he can do so either originally or belatedly. In case the income is less than basic exemption, then there are no late fees involved,” adds Gupta.

If someone still misses to file his/her belated return, then the income tax department may send them a notice and ask them to file the return.