Filing tax returns after due date comes with certain limitations

Until now, I was under the impression that an individual needs to necessarily file returns by 31 July. However, someone recently told me that I can do it anytime by 31 March next year. Please clarify the rule.

—Usman

Under section 139(1) of the Income-tax Act, it is mandatory for any individual whose total income exceeds a specified income threshold to file his personal tax return within the specified due date.

The due date for filing the tax return for individuals was 31 July (later extended to 31 August) except for individuals who are engaged in business or profession and whose accounts are required to be audited as per the prescribed provisions of the Act; for them the due date is 30 September.

Tax returns filed after the specified due date are considered as belated tax returns. You could file a belated tax return for a particular financial year (within two years from the end of the relevant financial year under section 139(4) of the Act. Further, penalty is not levied if the tax return is filed within one year from the end of the relevant FY.

However, belated tax returns suffer some limitations.

Revision of tax return not possible: A belated tax return cannot be revised subsequently. You have an option to revise the return only when you have filed your tax return on or before the due date.

For example, where you intend to claim a foreign tax credit/relief under the tax treaty based on a foreign tax return and information of the same is received after the due date or you discover any omission or misstatement in the original tax return filed. In such cases, you can revise your tax return within two years from the end of the relevant financial year or before completion of your assessment by the tax officer, whichever is earlier, if the tax return is filed within the due date.

Forgo the right to carry forward losses: If the tax return is not filed within the due date, the losses incurred in a financial year (except for house property loss and business loss on account of unabsorbed depreciation and capital expenditure on scientific research) cannot be carried forward to subsequent financial years for offset against corresponding income streams.

Where you have paid full taxes before the due date, you could file the return after the due date without paying any additional interest. However, in case, the taxes have not been paid entirely before the due date, you would end up paying additional interest on account of delay in payment of tax and subsequent delay in filing the return within the due date.

You could file belated tax return before 31 March, without any penalty or interest provided full taxes have been paid before the due date.