Important Keyword: Belated ITR, Due date, Income Tax Website, ITR Utility, Sec 139(4).

Section 139(4): Belated Return under Income Tax

Filing a Return of Income is the formal process through which taxpayers declare their total income and tax liability information. Compliance with tax obligations is bound by specific deadlines. Typically, the due date for filing an Income Tax return is the 31st of July of the relevant Assessment year. However, recognizing that taxpayers may miss this deadline, a provision for filing a belated return exists.

A belated return, as the name implies, refers to a return submitted after the deadline specified in the Income Tax Act. This option grants taxpayers a second chance to fulfill their tax obligations, albeit after the initial due date has passed.

What is a Belated Return?

Any individual who has failed to furnish a return within the specified time under section 139(1) of the Income Tax Act, has the opportunity to file a return for any previous year within certain limits. This can be done either before three months prior to the end of the relevant assessment year (which means by 31st December 2023 for the assessment year 2023-24), or before the completion of the assessment, whichever comes first.

For instance, consider the case of Surbhi who forgot to file her Income Tax Return for the financial year 2022-23 (assessment year 2023-24) by the deadline of 31st July 2023. She still has the option to file her return by 31st December 2023. However, it’s important to note that her return will be treated as a late return, filed under section 139(4) of the Income Tax Act, rather than under section 139(1).

Who can file a Belated Return u/s 139(4)?

From the financial year 2019-20 onwards, income tax return filing is compulsory under the following circumstances:

1. If an individual’s total income exceeds INR 2,50,000.
2. If the amount deposited in a current account held with a bank or cooperative bank surpasses INR 1 crore in a financial year.

Furthermore, individuals who are required to file their income tax return but have missed the original filing deadline still have the option to submit a belated return. To do so, taxpayers must select section 139(4) from the e-filing portal.

Consequences of late filing of ITR

Filing a Belated Return incurs the following consequences:

1. Interest Penalty under section 234A: The taxpayer is required to pay simple interest at a rate of 1% per month or part of a month for the delay in filing the Income Tax Return (ITR). This interest is calculated from the day immediately following the due date until the actual date of filing. For instance, if the due date is 31st July 2022 and the ITR is filed on 15th October 2022, the interest under section 234A will be applicable for 3 months.
2. Late Filing Fees under section 234F: The maximum penalty for late filing of a return is INR 5,000. However, the penalty amount varies based on the total taxable income:
   • If the total taxable income exceeds INR 5 lakh, the penalty is INR 5,000.
   • If the total income is less than or equal to INR 5 lakh, the penalty is INR 1,000.
   • If the total income is less than INR 2,50,000, no penalty is levied.

Limitations of filing u/s 139(4)

When filing a belated return, certain implications should be noted:

1. Losses Carried Forward: Losses under the heads of capital gains and Business and Profession cannot be carried forward if filing a belated return. However, losses from the head house property and unabsorbed depreciation can be carried forward even in case of a belated return.
2. Disallowed Deductions: Certain deductions are disallowed, including those under sections 10A, 10B, 80-IA, 80-IB, 80-IC, 80-ID, and 80-IE.
3. Interest on Refund: The taxpayer may lose interest on the refund under section 244A, if eligible, if the delay occurs due to the late filing of the taxpayer.
4. Change of Tax Regime: Changing the tax regime is not possible while filing a return under section 139(4).
5. Notice from Income Tax Department: If a person fails to file their belated return, the income tax department may send them a notice to file the return.

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Official Income Tax Return filing website: https://incometaxindia.gov.in/