Deadlines move, interest doesn’t: the tax clock keeps ticking
Miss your tax due date, and the meter starts ticking at 1% a month. That’s the simple, painful rule behind India’s income tax system. The government has eased timelines for this year, but penalties and interest haven’t gone anywhere. Here’s what changed, who gets more time, and what it costs if you’re late.
For Financial Year (FY) 2024-25, assessed in Assessment Year (AY) 2025-26, the ITR filing deadline for individual taxpayers who don’t need an audit has been extended to September 15, 2025 (from July 31). That extra six weeks helps salaried folks, freelancers, and many professionals wrap up paperwork without rushing.
Audit cases—think businesses and professionals whose books require audit—must file by October 31, 2025. If you’re involved in international or specified domestic transactions and need to furnish a transfer pricing report (Section 92E), the due date is November 30, 2025.
There’s also a safety net if you miss the regular date: a belated return can be filed until December 31, 2025. It’s legal, but it isn’t free—you’ll pay a late fee and interest. And if even that window closes, the law still gives you one last route: the Updated Return (ITR-U) under Section 139(8A), which carries steeper costs.
The Central Board of Direct Taxes (CBDT) has already used targeted extensions in the recent past. For FY 2023-24 (AY 2024-25), taxpayers who had to file a report under Section 92E got a 15-day extension—from November 30, 2024 to December 15, 2024—via CBDT circular no. 18/2024. Expect similar case-specific reliefs only through formal circulars, not speculation.
Quick refresher on the calendar: FY is the year you earn income (April–March). AY is the year the department assesses that income. Your FY 2024-25 income is reported in AY 2025-26.
If you miss the deadline: costs, fixes, and traps
Missing the due date attracts two main charges:
- Late filing fee (Section 234F): Rs 5,000 if total income exceeds Rs 5 lakh; Rs 1,000 if it’s up to Rs 5 lakh. If your total income is below the basic exemption limit, there’s no late filing fee.
- Interest on unpaid tax (Section 234A): 1% per month (or part of a month) from the original due date until the date you file and pay. This is on the outstanding tax after TDS/TCS and advance tax.
Other interest provisions (like 234B and 234C) can apply if you didn’t pay enough advance tax. Those are separate from the late filing fee.
Belated return: You can file by December 31 of the assessment year. The trade-off is the mandatory late fee and interest. You also risk slower refunds because the department processes on-time returns first.
Revised return: Made a mistake? You can revise your original or belated return by December 31 of the assessment year. Fix mismatches, add forgotten income, or correct deductions. Don’t sit on errors—mismatches against your AIS/TIS or Form 26AS can trigger notices.
Updated Return (ITR-U): If you missed everything or underreported income, Section 139(8A) lets you come clean later. You can file an updated return within 24 months from the end of the relevant assessment year. The cost is steep: extra tax of 25% on the additional tax and interest if you file within 12 months, or 50% if you file between 13 and 24 months. You can’t use ITR-U to claim a refund or reduce your tax—only to increase what you owe.
One big catch late filers overlook: loss carry-forward. If you file after the due date, you generally lose the right to carry forward most losses (business and capital losses). The usual exception is loss from house property, which can still be carried forward. If you trade shares or run a business, this rule alone makes timely filing worth it.
Refund timing: File late, and expect delays. Also, interest on refunds (Section 244A) is usually computed from the date you actually file, not from the original due date if you were late. That’s another quiet cost of missing deadlines.
Don’t forget e-verification. After you file, you must e-verify within 30 days. If you don’t, the return can be treated as not filed at all—putting you back at square one, with interest still ticking. E-verification takes minutes via Aadhaar OTP, net banking, or Demat/Bank account EVC.
How penalties and interest play out—three quick examples:
- Salary earner with TDS: You file on October 10 with no tax payable because TDS covered everything. Late fee applies (based on income slab), but there’s no 234A interest since there’s no unpaid tax.
- Freelancer with unpaid tax: Due date was September 15. You file on November 20 and pay Rs 40,000 tax then. Interest under 234A runs at 1% per month (September 16 to November 20 counts as 3 months), so Rs 1,200 interest, plus the late fee.
- Capital gains missed: You forgot to report a June 2024 stock sale. You file an updated return in November 2026 (13–24 month window). You’ll pay the extra tax on those gains, interest, plus an additional 50% on the combined tax and interest under ITR-U.
Who must file? If your total income exceeds the basic exemption, you’re on the hook. Also, filing can be mandatory for specific cases like large deposits, high spending, or foreign assets—check your AIS/TIS and Form 26AS for signals. And remember, even if your income is under the threshold, filing helps if you need loans or visas and to claim TDS refunds.
Forms and prep: Most salaried taxpayers use ITR-1 (if eligible). Capital gains, multiple house properties, or business income push you to ITR-2/3. Get Form 16 from your employer, interest certificates from banks, capital gains statements from brokers, rent and home loan data, and your AIS/TIS from the portal. The department’s pre-filled forms make this easier, but cross-check—pre-fill can miss savings interest, certain capital gains, or small TDS entries.
A quick timeline for AY 2025-26 (for income earned in FY 2024-25):
- Individuals (no audit): September 15, 2025
- Audit cases: October 31, 2025
- With international/specified domestic transactions (92E): November 30, 2025
- Belated/revised return: December 31, 2025
- Updated Return (ITR-U): Up to 24 months after the end of AY 2025-26, with extra tax at 25%/50% depending on timing
What to do now if you’re behind:
- Check your AIS/TIS and Form 26AS for all incomes and TDS entries.
- Compute taxes accurately—don’t forget advance tax interest if applicable.
- File before December 31 to avoid losing loss carry-forwards.
- Pay outstanding tax and e-verify within 30 days.
- If you discover missed income later, use revised return (by Dec 31) or ITR-U (within 24 months) to fix it, even if it costs more.
The tax system rewards punctuality. The extensions buy time. The interest clock doesn’t.
