Filing your Income Tax Return (ITR) after the due date not only attracts late fees but can also result in the loss of critical tax-saving options. A recent case from Ghaziabad has highlighted how missing the deadline can significantly increase tax liability under the new tax regime.
Ghaziabad resident Mohit Jain recently raised a question after failing to file his Income Tax Return before the extended deadline of 16 September. He claimed that filing the return under the new tax regime is now resulting in a tax liability of Rs 7.5 lakh. He wanted to know whether there was any way left to save tax at this stage.
Extended ITR Deadline and Tax Regime Choice
Moneycontrol shared this query with well-known tax expert CA Balwant Jain. Responding to the issue, he explained that for most taxpayers, the last date to file an Income Tax Return is 31 July following the end of the financial year. However, for the financial year ending on 31 March 2025, the deadline was extended to 16 September.
Under Section 115BAC of the Income Tax Act, individual taxpayers and Hindu Undivided Families (HUFs) may elect between the old and new tax regimes, subject to certain conditions.
New Tax Regime Is the Default Option
CA Balwant Jain clarified that the new tax regime is the default regime. If a taxpayer wishes to opt for the old tax regime, the selection must be made at the time of filing the return or before the due date. An essential condition is that the taxpayer has no business income.
Taxpayers without business income may switch between the old and new tax regimes each financial year, depending on which suits them best.
Rules for Taxpayers With Business Income
For taxpayers who have business or professional income, the rules are stricter. Such taxpayers may switch from the old regime to the new regime only once in their lifetime. After changing, they cannot revert to the previous regime unless their business or professional income ceases entirely.
Why Mohit Jain Cannot Save Tax Now?
According to CA Balwant Jain, Mohit Jain did not select the old tax regime while filing his return or before the deadline. As a result, he no longer has the option to choose the old regime. He is now required to file his Income Tax Return under the new tax regime and pay the full tax liability applicable under it.
This case clearly shows how the late filing of the Income Tax Return can lead to higher tax liability and the loss of valuable exemptions and deductions.