ITR Date Extension: Key Information & Updates

ITR Date Extension: Key Information & Updates

The Income Tax Return (ITR) filing deadline is important for individual taxpayers, businesses, and organisations. When ITR date extension, the deadline provides additional time to meet tax obligations without penalties or late fees. The Income Tax Department of India, often through the Central Board of Direct Taxes (CBDT), may extend the due date for several reasons, such as technical issues on the tax portal, natural calamities, or some special considerations. It is necessary to file income tax returns before the due date to avoid penalties and legal problems. This article will provide detailed information on ITR date extensions and the importance of filing income tax returns before the ITR extension date.

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Benefits of Filing ITR before the Due Date

Filing your Income Tax Return (ITR) before the due date offers several financial and operational advantages. Here’s why timely filing is beneficial for both individual taxpayers and companies:

1. Faster ITR Refund Processing

The Income Tax Department processes refunds on a first-come, first-served basis. Early filing positions you for a quicker ITR refund, which means your money is returned sooner compared to those who file closer to the deadline. Avoid delays and receive your refund without hassle by filing on time.

2. Carry Forward of Losses for Future Adjustment

For companies, timely filing allows for the carry forward of business losses to future assessment years, as per Section 72 of the Income Tax Act. This enables businesses to offset current losses against future profits for up to eight assessment years, improving cash flow and tax efficiency. Failing to file on time forfeits this right, potentially impacting financial health.

3. Avoidance of Penalties and Additional Charges

Late filing attracts a fee under Section 234F, and unpaid tax liabilities accrue interest charges under Sections 234A, 234B, and 234C. Filing on time helps avoid these costs, preserving funds that would otherwise go toward penalties and interest.

4. Reduced Risk of Tax Scrutiny

Filing your ITR by the due date reduces the likelihood of scrutiny from tax authorities. Late filings can flag potential issues, draw unwanted attention from the tax department, and increase the chance of receiving notices or facing in-depth examination.

5. Efficient Refund Processing

Filing promptly ensures the Income Tax Department processes your refund quickly, streamlining your tax experience. Late submissions may delay refunds, leading to cash flow interruptions, especially for those anticipating significant returns.

6. Enhanced Access to Loans and Credit Facilities

Financial institutions, such as banks, require timely filed ITRs when evaluating loan applications and other credit facilities. A timely ITR indicates financial stability and tax compliance, increasing the likelihood of obtaining credit approval and competitive interest rates.

7. Simplified Winding-Up Process for Companies

Maintaining up-to-date tax filings ensures a smoother closure process if a company decides to wind up operations. Properly filed returns demonstrate compliance and avoid additional delays or penalties in the winding-up process.

8. Reliable Proof of Income and Address

An ITR is a credible proof of income and address for various purposes, including securing an Aadhaar card. Filing regularly also builds a verifiable financial history, which can be helpful for future transactions or financial disclosures.

Also read: ITR Filing in India: Your Complete Guide

In some cases, the ITR date extension will occur due to several reasons. Let’s explore those instances,  

What are the Reasons for the ITR Date Extension?

The Income Tax Department and the Central Board of Direct Taxes (CBDT) may extend the due date for filing Income Tax Returns (ITR) under certain circumstances. Here are some common reasons why an ITR date extension might be granted:

• Technical Glitches on the E-Filing Portal
  Technical issues on the Income Tax Department’s e-filing portal can prevent taxpayers from filing their returns smoothly. When portal downtime or glitches persist close to the due date, the CBDT may do the extension of ITR filing date to ensure taxpayers have adequate time to complete the filing process.
• Natural Disasters and Regional Disruptions
  Events like floods, cyclones, and other natural disasters can disrupt personal and business activities in affected regions. To provide relief to impacted taxpayers, the government may order the ITR date extension in those areas, allowing them additional time to comply.
• Changes in Tax Laws or Filing Procedures
  Major amendments to tax laws, such as updates to the income tax return forms or adjustments in the e-filing process, may require taxpayers to adapt. Extensions give taxpayers and companies more time to understand and comply with new filing requirements without facing penalties.
• Increase in Reporting Requirements
  Enhanced disclosure requirements, such as detailed reporting on foreign assets or newly added fields in ITR forms, can make filing more time-consuming. Extensions are sometimes granted to help taxpayers accurately comply with expanded requirements.
• Delays in Issuing Form 16 and Other Documents
  Employees and taxpayers often depend on Form 16 and other essential tax documents from employers or institutions to file their returns. Delays in issuing these documents can make it difficult for taxpayers to complete their timely returns, warranting an extension.
• Administrative Considerations by the Tax Department
  The tax department might occasionally experience internal delays in processing or administrative decisions. In such cases, the department may do the extension of ITR filing date to manage submissions better.
• Representation from Taxpayer Associations
  Taxpayer groups and professional bodies, such as associations of chartered accountants, sometimes request ITR date extensions due to various practical difficulties taxpayers face. An extension may be granted when these representations are acknowledged to respond to public demand.

Consequences of Not Filing ITR before the extended deadline

The legal consequences for not filing the ITR before the prescribed or extended deadline are synonymous for taxpayers. Here are the consequences one will encounter when the ITR filing is not completed before the extended deadline. 

• Late Filing Penalty under Section 234F
  If you miss the extended deadline, you may be subject to a late filing fee under Section 234F of the Income Tax Act. This fee can go up to ₹5,000, though it may be reduced to ₹1,000 for small taxpayers with incomes below ₹5 lakh. Filing on time helps avoid this avoidable cost.
• Accrual of Interest under Section 234A
  Taxpayers with outstanding tax liabilities may incur interest charges of 1% per month on the unpaid amount specified under Section 234A. This interest starts accruing immediately after the original due date, making it essential to file on time to avoid additional interest costs.
• Loss of Carry Forward of Losses
  Filing after the deadline prevents taxpayers from carrying forward certain losses, such as business and capital losses, to offset future income. This can impact long-term tax planning, particularly for businesses relying on loss carryforwards to reduce future tax liabilities.
• Risk of Receiving Notices and Scrutiny
  Late filing increases the risk of receiving notices from the tax department, as it may flag your return for potential scrutiny. Non-compliance can lead to a more detailed review, potentially resulting in further inquiries, audits, or penalties.
• Delayed Refunds
  If you’re eligible for a tax refund, filing after the due date may delay the refund process, as late returns are processed after timely ones. This can create cash flow issues, mainly if you rely on the refund for other financial obligations.
• Difficulty in Obtaining Loans and Financial Approvals
  Financial institutions require timely filed ITRs for loan applications and credit assessments. Filing late or inconsistently can impact your financial credibility, making it harder to secure loans or obtain favourable interest rates from banks.
• Impact on Visa Applications
  For individuals applying for visas, timely filed ITRs are often required to prove financial compliance. Missing deadlines or inconsistent filings may complicate the visa process, especially for countries that closely review applicants’ financial records.

Get complete information on Penalties for late filing of ITR in India

Latest Updates on ITR Due Date Extension

Below, we are providing the latest updates regarding the ITR due date extension, 

ITR Due Date Extension for Corporates for the AY 2024-2025

The Central Board of Direct Taxes (CBDT) has announced an extension of the due date for corporates to file their Income Tax Returns for the Assessment Year 2024-25. Initially set for October 31, 2024, the deadline has now been extended to November 15, 2024, for taxpayers specified under clause (a) of Explanation 2 to sub-section (1) of section 139 of the Income Tax Act, 1961.

This extension applies to the following classes of taxpayers:

• Corporate Assessees: Companies that fall under the definition of corporate entities.
• Non-Corporate Assessees: Individuals or entities whose books of accounts are mandated to be audited under the Income Tax Act or any other prevailing laws.
• Partners of Audited Firms: This includes partners whose firm’s accounts are subject to audit requirements, as well as their spouses, where the provisions of section 5A (related to the apportionment of income governed by the Portuguese Civil Code) are applicable.

This additional time allows the affected corporates and other eligible taxpayers to submit their returns without incurring penalties, ensuring compliance with tax obligations. Find the attachment issued in the Income tax department below: