Belated ITR Filing - Penalty, Process, and Late ITR Filing

In India, filing the Income Tax Return can be a bit of a task, especially for all the Non-Resident Indians (NRIs). It can be a daunting task to manage the job overseas, handling multiple bank accounts, and doing all the paperwork from a different country. The situations can be very stressful, such as after you pay TDS on your NRO fixed deposits or rental income, you may suddenly realise that the deadline of your ITR filing has passed. 

To avoid all these hassles, you should know about all the details of belated filing so that even after missing the due date, you can still file your ITRs. The late filing can also cause delay refunds, increased scrutiny from tax authorities, and complicate financial planning for the NRIs.

Understanding Belated Return for NRIs 

A belated return is an Income Tax Return that is filed after you miss the original deadline under Section 139(1). Here are some key points. For the financial year 2024-25 (AY 2025-26):

• The due date of ITR filing for most of the NRIs without the requirement of an audit was 15 September.
• If NRIs miss this deadline, they can still file their Income Tax Return by 31 December 2025 under Section 139(4) of the Income Tax Act.

For all the NRIs, this is very necessary because failing can affect not only their income taxes but also their remittances, banking compliance, and even their loan applications or future visa in India. 

Primary Features of Belated Return for NRIs

The key features of the belated returns for NRIs are explained in the table:

Penalty and Interest for Late ITR Filing

Under the Income Tax Act, if you file your return after the due date, then it will trigger some interest and penalties. It is very important for the NRIs to stay aware because the delays can cause unnecessary increased costs and compliance risks.

1. Section 234 F: Late Fee

The late fee for ITR filing is applied as per the total income:

• If income is more than Rs 5 lakhs: Rs 5,000
• If income is 5 lakhs or less: Rs 1,000
• If the income is less than the exemption limit: No fee

2. Section 234 A: Interest on Unpaid Tax

There is an interest charged at the rate of 1% per month on the unpaid taxes. It starts applying from the original due date till the date of filing.

3. Legal Context 

• Section 139(4): It allows the belated filing.
• Sections 234A, 234B, 234C: These sections impose late fees and interest on the late filing of ITR or late payment of taxes.
• Section 271F: Non-filing of the Income Tax Returns can attract many penalties and notices.

What are the Consequences of Non-Filing?

• You may receive the penalty notices and have to pay the additional interest.
• Your refunds may be delayed or even denied.
• If the tax liability is more than Rs 25,000, then you may face prosecution under Section 276CC.
• You may face complications in getting a visa or a loan.

Restrictions of a Belated Return

This section contains all the limitations of a Belated Return:

• Interest: The interest is applied to any unpaid taxes under sections 234A, 234B, and 234C. 
• Restrictions for Carrying Forward the losses: You cannot carry forward the capital and business losses. Only the losses from house property can be carried forward if you file the return late.
• Inability to choose the old tax regime: If you miss the original due date, then you cannot choose the old tax regime. Even if you have submitted the Form 10-IEA earlier, you can file the belated returns only under the new tax regime.
• Refund delays: In case of belated return, the eligible refunds may take longer to process than the normal return filing.
• Risk of Notices: You can get the notices from the Income Tax Department if you file the late returns. It can cause stress and potential complications.

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How to File Belated Returns for NRIs?

The NRIs can still file the belated returns after they have missed the original ITR deadline. There are two methods that an NRI can use, online and offline, to file belated returns and stay compliant with the Indian tax laws. 

Online Method

The method of online filing is fast, secure, and very convenient. You can follow the given steps to proceed: 

1. You need to log in to your e-filing account.
2. Navigate the options: e-file, then Income Tax Returns, and then click on File Income Tax Return. 
3. Choose the relevant assessment year and proceed. 
4. Select the online filing mode and start a new filing.
5. Choose your status from the options on the screen (individual, HUF, etc.)
6. Choose the ITR form applicable there.
7. Verify your personal details.
8. In the filing section, choose 139(4) - Belated Return.
9. Fill in all the sections, like income details, deductions, and pay tax/late fees.
10. Submit it and e-verify by using an Aadhaar OTP, Netbanking, or any other method.

Offline Method

The individuals who are interested in the offline filing method can follow the given steps: 

1. Visit the Income Tax Portal and download the ITR Offline Utility. 
2. Prepare the Income Tax return by using the utility and generate a JSON file.
3. Now, you need to upload a .json file to the income tax portal.
4. You can verify the return by using Aadhaar OTP, net banking, or by sending a signed ITR-V to the Central Processing Centre (CPC). 

Consequences of Missing the 31 December Deadline

Even after missing the 31 December deadline for the belated return filing, there is still an option by which you can file even late. It is always better to file the ITR late than non-filing. In these types of cases, you should apply for a condonation under Section 119(2)(b) of the Income Tax Act. In this process, you send a request to the Income Tax Commissioner or the prescribed tax authority to allow you to file a late return by providing a valid reason for the delay.

Your request is considered approved if:

• The claim is correct and genuine.
• You miss the filing date due to a genuine hardship.
• A refund arises due to advance tax, excess TDS, or self-assessment tax.

Keep in mind that under the Income Tax Act, it is not possible to make a tax assessment.

Some Important points to remember:

• All the due taxes with the interest must be paid, even after the return is delayed, with Sections 234A, 234B, and 234C.
• Non-filing can cause penalties up to Rs 5,000 under Section 271F. If you provide a valid explanation, then it may result in a waiver of the penalty. 
• If you continue the non-filing of the ITR, then it can lead to legal action, notices, or, in extreme cases, there can be imprisonment for up to 7 years with prosecution under Section 276CC. 

Comparison Between Original vs Belated Return

Here is the quick comparison between the original and belated Income tax return based on a few features: 

How Can Visament Help?

As an NRI, if you miss the original ITR deadline, it is very important to file the belated return to stay compliant with the Indian laws and regulations. You can avoid the legal complications and claim the eligible refunds after filing the belated return. Steps like delaying the process or neglecting it can cause you to pay the extra penalties, interest, or you may have to face double taxation. 

If you are not that good with the legal knowledge and the process of belated ITR filing, then you should contact any highly skilled professional from Visament. They have years of experience and come with expertise in ITR filing. Get your ITRs filed with the affordable pricing of Visament and stay compliant with the Indian government. Connect with experts and never miss out on your rightful refunds or tax credits.