Late Income Tax Return Filing A.Y. 2025-26

When you opt for Late Income Tax Return Filing A.Y. 2025‑26, you must be ready for certain costs and consequences. Here’s a breakdown:

A. Late filing fee (Section 234F)

Under Section 234F of the Income Tax Act:

• If your total income exceeds ₹5 lakh, the maximum late fee is ₹5,000 if you file before 31 December.
• If your income is up to ₹5 lakh, the late fee is limited to ₹1,000.
• If you file after 31 December (i.e. very late), the fee may rise (sometimes to ₹10,000 for high incomes) in some cases. 

Thus, if you expect to exceed ₹5 lakh income, don’t delay — file the late return before 31 December to cap that penalty.

B. Interest (Section 234A)

If you owe tax (i.e. after accounting for TDS or advance tax) and you file late, interest accrues:

• Rate: 1% per month (or part of a month) on the unpaid tax, from the original due date until the date of payment
• Thus, the longer you delay, the more interest you pay.

C. Other consequences and risks

1. Loss of carry-forward of losses
   Some losses (especially business or capital losses) can only be carried forward to offset against future gains if your return is filed timely. If you miss the deadline entirely, you may lose that right. 
2. Delayed refunds
   If you have overpaid tax, the refund process is delayed. The tax department may take longer to process belated returns.
3. Ex parte assessment
   If you don’t file a return at all, tax authorities may make a “best estimate” assessment of your tax without your inputs (often leading to higher tax liability). 
4. Prosecution in extreme cases
   Under Section 276CC, willful failure to file return — particularly when tax evasion is involved — can lead to criminal prosecution (imprisonment and fine). This is rare, but possible in serious cases. 
5. Loss of credibility / hassles
   Non‑filing or late filing may create complications in loan approvals, visa applications, or business verification, since institutions prefer consistent tax filings.

So yes, late filing has costs — but if you must file late, do it sooner rather than later.