Removal of Restrictive Clauses for Claiming Refunds on Belated Returns
The Income Tax Department has simplified the process for taxpayers who file belated returns by removing earlier restrictions on claiming refunds. These changes allow individuals to recover excess taxes even if they miss the original return deadline. Here’s a detailed guide to understanding the new rules and how to benefit from them.
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What is a Belated Return?
A belated return is an income tax return filed after the original due date under Section 139(4) of the Income Tax Act. The difference between original and belated returns is that the original return is filed before the due date (usually 31 July for individuals), while a belated return can be filed later, before the end of the assessment year.
Restrictive Clauses Previously Applied to Belated Returns
Earlier, taxpayers faced multiple hurdles when filing belated returns:
- Limitations on claiming certain deductions: Some
deductions under Chapter VI-A
were not allowed.
- Restrictions on carrying forward losses: Losses from house property or business could not be carried forward.
Refund eligibility concerns before amendment: Taxpayers often faced delays or outright denial of refunds.
Removal of Restrictive Clauses – What Changed?
The Finance Act 2025 removed several restrictive clauses, giving more freedom to taxpayers.
- Recent policy or legal updates: From FY 2025–26 onwards, deductions and loss carry-forwards are allowed in belated returns.
- Impact on refund claims: Taxpayers can now claim legitimate refunds even if the return is belated.
- Applicability: These changes apply to returns filed for Assessment Year 2026–27 and beyond.
Step-by-Step Process to Claim Refund on Belated Returns
Follow these steps to claim a refund seamlessly:
- Filing through the e-filing portal: Log in to the Income Tax e-Filing portal.
- Key documents required:
PAN
, Form 16/16A, bank details, TDS certificates.
- Time limits and deadlines: File before 31 December of the assessment year to remain eligible for a refund.
Benefits of the New Changes for Taxpayers
These reforms bring several advantages:
- Easier refund claims: Simplifies the process of recovering excess TDS or advance tax.
- Reduced penalties and compliance burden: Less risk of losing deductions.
- Greater taxpayer confidence: Encourages timely and honest disclosures.
Penalties & Limitations Still Applicable
While restrictions are relaxed, some rules remain:
- Interest under Section 234A/B/C: Payable on late filing or payment of taxes.
- Late filing fees under Section 234F: ₹1,000 to ₹5,000 depending on income.
- Refund delays: Errors or missing documents can still delay processing.
Conclusion
The removal of restrictive clauses on belated returns is a welcome change for taxpayers, allowing them to claim deductions and refunds more easily. However, timely filing and accurate documentation are still essential to avoid penalties and ensure faster refunds.
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Frequently Asked Questions
-
Can I still claim all deductions in a belated return?
Yes. From FY 2025–26, deductions under Chapter VI-A and losses can be claimed even if the return is belated.
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What happens if I miss the revised belated return deadline?
You cannot claim refunds or deductions if you fail to file before 31 December of the assessment year.
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Is refund guaranteed after filing a belated return?
Refund is granted if taxes paid exceed liability and all details are correct. -
Can I revise my belated return after claiming a refund?
Yes, revised belated returns are allowed within the same assessment year.
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Will removal of restrictive clauses apply retrospectively?
No, these changes apply prospectively from FY 2025–26 onwards.
