ITR filing deadline missed: A belated ITR for FY2023-24 (AY 2024-25) can only be filed under the new income tax regime

The government did not extend the income tax return filing deadline for the financial year 2023-24 (assessment year 2024-25). The last date to file ITR for individual taxpayers who are not required to undergo auditing of their accounts was July 31, 2024.

Those who submit their ITR after the July 31, 2024 deadline must file a belated tax return before December 31, 2024. Filing a belated return carries various disadvantages that taxpayers should be aware of. When filing a belated ITR you have to pay a penalty of Rs 5,000 and penal interest under Section 234A of the Income-tax Act, 1961.

What is the last date to file ITR with penalty? How to file, charges

ITR filing deadline: You cannot switch to old tax regime

Another big disadvantage is that, starting August 1, 2024, individuals cannot opt for the old tax regime when filing their tax return for FY24. The default tax regime under the current income tax laws is the new tax regime.

If you file a belated ITR, you won't be able to claim tax deductions and exemptions available under the old tax rules. This is a drawback for someone planning on switching to the old tax system, as their tax payment would be lower than what it is under the new tax regime.

Belated ITR: How much tax you forgo

The following example shows how income tax payable could increase because of the inability to claim deductions and tax exemptions under the old tax regime, as per the taxpayer's initial plan.

If Mr. A's gross taxable income is Rs 13 lakh, and he claims deductions and tax exemptions of Rs 3.75 lakh under the old tax regime, his taxable income would be Rs 9.25 lakh on which tax will be calculated. If he files his income tax return under the old tax regime, he must pay an income tax of Rs 1,01,400 (including cess). However, by filing a belated ITR under the new tax regime, his tax liability will be Rs 1,14,400 (including cess) plus a Rs 5,000 penalty. If there is any pending tax payment before filing the belated ITR, penal interest under Section 234A will also be applicable. Mr. A would lose at least Rs 18,000 by filing a belated ITR after missing the deadline.

Income tax regime: What taxpayers should do now

As mentioned above, the option to opt for the old tax regime is not available when filing belated ITR for FY2024. Taxpayers should file their belated ITR by December 31, 2024. If the belated ITR is not filed by the December deadline, individuals will only be able to file an updated return. This would involve paying 25-50% penal interest on the tax dues amount, along with a penalty of Rs 5,000. Filing an updated ITR can result in higher tax payments than filing a belated ITR under the new tax regime.

Paying income tax is not enough, you must file the ITR to avoid jail in certain cases

As per tax experts, failing to file an ITR has various consequences. These include penalties and potential prosecution. The income tax department may send you notices or intimations, and you could be considered a defaulter. There have been instances where jail sentences have been awarded to individuals for failing to file an income tax return.

Under the income tax laws, if your tax liability is more than Rs 25,000, you could be punished with rigorous imprisonment for a minimum of six months and up to seven years, along with a fine. For tax liabilities less than Rs 25,000, the punishment includes rigorous imprisonment for a minimum of three months and up to two years, plus a fine.