Belated ITR filing deadline nears: Taxpayers can still claim refunds, but with key financial consequences

Belated ITR: With the Income Tax Return (ITR) filing deadline for Assessment Year (AY) 2025–26 now closed for non-audit taxpayers, attention has shifted to the next important date on the tax calendar—December 31, the last day to file a belated return. This window remains crucial for individuals who missed the extended September 16 deadline but still expect refunds for excess tax deducted during the year.

The ITR filing date for FY 2024–25 was extended twice, first by 46 days to September 15, and then by an additional 24 hours, offering taxpayers more time amid backend and compliance challenges. Despite the extensions, large numbers of salaried earners and small taxpayers were unable to file on time, raising widespread concern over whether delayed filings would disqualify them from receiving refunds.

Tax experts, however, say the fear is misplaced. Refunds are still issued on belated returns, though the financial implications differ significantly for late filers. The biggest impact lies in loss of refund interest, an aspect many taxpayers realise only after receiving a lower-than-expected credit.

Refunds allowed, but...

Under Section 244A of the Income Tax Act, interest on refunds is calculated from April 1 of the assessment year—but only when the return is filed within the prescribed deadline. For belated returns, interest accrues only from the date of filing, meaning taxpayers lose several months of interest even if the government has held their excess TDS throughout the year. This difference can be substantial for high-refund cases.

Refund denial

The longstanding myth—“belated return means no refund”—stems from processing delays and mismatches rather than legal restrictions. Belated returns typically take longer to process and may show “under processing” for several weeks on the portal. Additional delays occur when:

Details in the Annual Information Statement (AIS) or Form 26AS do not match

TDS entries differ from Form 16

Old tax demands are offset against the refund

Bank accounts for refund credit remain unvalidated

While these issues may slow the process or reduce the final amount, they do not prevent the refund itself.

Penalties attached

Late filers must be aware of the statutory costs:

Section 234F fine: ₹5,000 for most taxpayers; ₹1,000 if income is below ₹5 lakh

Section 234A interest: 1% per month on unpaid tax dues (not applicable if only a refund is due)

Loss of certain carry-forward benefits: Losses under capital gains, business income or house property generally cannot be carried forward

Non-reversible loss of interest under Section 244A

Steps for taxpayers

Tax professionals advise taxpayers to file well before the deadline, as rushing on the last day often leads to mistakes. Before filing, individuals should:

Match AIS, Form 26AS and Form 16 carefully

Pre-validate the bank account

Claim all eligible deductions (80C, 80D, NPS, home loan interest, education fees)

E-verify the return immediately

Refund status can be checked through both the Income Tax Portal and the TIN-NSDL Refund Status tool.

Bottom Line: Missing July 31 does not cancel your refund. Belated ITRs still qualify—but interest loss is unavoidable, and processing may take longer. With the December 31 deadline approaching, taxpayers expecting refunds should file promptly and ensure all details are accurate.