New Delhi: Although the deadline to file income tax returns for the financial year is gone, if you are thinking of filing a belated ITR, here are some probable disadvantages. You can file your belated return till December 31, but there are major drawbacks that might badly affect your financials.
1. Restraints to Loss Carry Forward
Late filing of ITR forfeits the chance to carry losses forward into subsequent years. Ordinarily, many losses are allowed to be carried forward for 8 years. The belated returns just do not allow for this benefit and hence might affect your future tax calculations.
2. No Interest on Refunds
In case the ITR is filed on time, from the due date for filing, interest at 0.5% per month would be levied to the date of refund. If there is a belated ITR, such interest is not paid, and hence you would lose out on earning an interest on the amount of refund that may arise because of delayed refund.
3. Penal Interest on Outstanding Taxes
In case of belated ITR filing, if there are outstanding taxes against you, penal interest under Sections 234A, 234B, and 234C shall be paid. The penal interest accrues at the rate of 1 percent per month on the outstanding tax, further adding to your financial burden.
4. Refunds get delayed
Processing of belated returns takes longer, and hence, any refunds due are also delayed. This impacts your financial planning, especially if you were counting upon the timely refund to cover expenses or investments.
5. Limited tax regime options
In the case of a belated ITR, one has no other option but to opt for a new tax regime since options for the old tax regime are already closed. The old regime grants a plethora of deductions and exemptions that may be ceasing to exist in the new regime.
That is to say, while filing a belated ITR is permissible, it suffers from a multitude of disadvantages. These include loss of carry forward benefits, no interest on refunds, penal interest, delayed refunds, and restricted choices under the tax regime. Hence, filing returns on time is advisable so that one can stay away from these issues and get optimal tax benefits.
Filing a belated income tax return can lead to several significant drawbacks, including loss of loss carry forward benefits and delayed refunds. Additionally, you may face penal interest on outstanding taxes and lose the option to choose the old tax regime. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
