The Income Tax Act, 1961, regulates in India the assessment, collection, and management of direct taxes. According to the Act, filing income tax returns is one of the taxpayer’s obligatory roles.
It is compulsory for all taxpayers, including companies, corporations, and other legal entities, to furnish Income Tax returns every year after their income exceeds the basic exemption limit. The returns contain particulars regarding their income and deductions, the amount of tax paid, and other financial aspects.
This movement toward transparency facilitates an easier determination of liability or refund and thus encourages taxpayers in the country to abide by the tax laws.
The Act provides for various types of Income Tax Returns from ITR-1 to ITR-7 for different categories of taxpayers and for different sources of income.
Generally, ITR is filed through electronic means on the e-filing website maintained by the Income Tax Department.
Early and accurate filing of ITR not only fulfils one’s statutory requirement but also benefits financial status through loan availability, smooth foreign immigration processes, and overall financial credibility.
Its implementation is a phenomenon toward raising revenue for the government and the development of the economy.
What is a Belated Return?
An entity can potentially lodge its belated return deposition with the income tax department after the specified date, subject to certain restrictions under the Indian Income Tax Act, with some consequences attached. Section 139(1) of the Income Tax Act, 1961, provides that a belated return is one made after the due date for filing an income tax return; that is, late with respect to income tax under usual circumstances, i.e., for the non-audit case, the usual deadline of 31st of July for the assessment year. If a taxpayer cannot file his return before such date, presumably he is allowed to file it late as per Section 139(4).
A late return can be filed until 31st December for the respective assessment year or prior to the completion of assessment for that assessment year, whichever is earlier. So, this Section does allow for late filing of return, but with Warts and barbs. A big drawback is mainly that losses under some heads (business loss or capital loss) cannot be carried forward in case of late filing of return, whereas losses under house property can be carried forward.
In addition, under Section 234F, a late fee is to be paid by the taxpayer as follows:
- 1,000 if the total income is less than Rs.5 lakh
- 5,000 if total income exceeds Rs.5 lakh
Other than the late fee, there can also be interest charged under Section 234A in case of outstanding tax for every month or part thereof until the return is filed.
In spite of the penalty, a delayed return is inevitable in case the taxpayer misses the first deadline, because not filing invites more legal sanctions like notices from the Income Tax Department, disallowance of deductions, or prosecution in serious cases.
In brief, a late return is a chance for taxpayers to complete their tax payments legally after missing the deadline, with a small risk and penalty.
What is an Advance Tax Return?
Technically speaking, there is no such expression “Advance Tax Return” available in the Indian Income Tax law. But this term is being wrongly used by individuals when they speak of advance tax payment or prior filing of income tax returns. For example, to make things clear, one has to know the actual meaning of advance tax.
Advance tax refers to the advance payment of income tax in the middle of a financial year, instead of paying the entire amount at the close of the financial year. It can also be referred to as ‘pay-as-you-earn’ taxation. According to Section 208 of the Income Tax Act, 1961, any individual or business entity that expects to have an amount of ₹10,000 or above as tax burden in any financial year has to pay advance tax.
Advance tax is levied on salaried individuals having other incomes (e.g., rental income or interest), freelancers, professionals, and businessmen. The advance tax has to be paid in four specific instalments:
- On or before 15th June – 15% of the total estimated tax
- On or before 15th September – 45% of the total estimated tax
- On or before 15th December – 75% of the total estimated tax
- By 15th March, 100% of the total estimated tax
Default in payment of advance tax in time attracts interest charges under Sections 234B and 234C.
Individuals confuse the payment of advance tax or early filing of the ITR as the advance tax return itself, and, therefore, no standalone ITR is found as the advance tax return. Advance tax payments are accepted through Challan No. ITNS 280, which is successfully enlisted online at the income tax portal or at the specified branches of the bank.
In sum, advance tax is the prepayment of taxes during the course of the year, as opposed to the submission of returns. The actual tax return itself is filed later, showing a total of the income received and taxes already paid, including advance tax.
Difference Between Belated Return and Advance Tax Return
A Late Filing refers to the delayed submission of your income tax return. An advance tax is the prepayment of estimated taxes in advance of the close of the fiscal year. They are not the same and are used for different reasons in the tax compliance regime.
1. Definition
- Belated Return is submitted after the time limit under Section 139(1) of the Income Tax Act. Non-audit cases for individuals are required to be submitted by July 31st of the assessment year. Such taxpayers who fail to accomplish this date are free to submit a belated return on or before December 31st (or alternative revised deadlines) of the identical assessment year.
- The phrase “Advance Tax Return” does not have any statutory definition in the Income Tax Act, 1961. Yet, it’s normally connected with pre-termination advance payment of return. Advance Tax means payment of income tax in four instalments at the end of the fiscal year, not a return. It is to be applied where the tax liability exceeds ₹10,000 for a fiscal year.
2. Legal References
- Delayed returns are addressed in Section 139(4).
- Advance Tax is addressed in Sections 208-219 of the Income Tax Act, 1961.
3. Who Has to File and Pay?
Belated Return: Those who have lost the deadline for filing.
Advance tax generally applies to
- salaried persons having additional income (like interest or rent).
- All professionals, freelancers, and corporate types are categorised similarly.
- Companies and corporations are also categorised the same way.
4. Intention
- A belated return is filed to comply with the tax laws and requirements when the deadline has been missed.
- To make sure that tax debt is settled on time and to prevent interest charges under Sections 234B and 234C, one pays an advance tax.
5. Method of Compliance
- Using the proper ITR forms, one can submit a delayed return online via the Income Tax e-filing system.
- For advance tax payment, pay Challan ITNS 280 at approved banks or online.
6. Time Line
Usually, on July 31 of the assessment year for individuals, belated returns are submitted after the original due date. The return is submitted subsequent to the close of the financial year, indicating a belated return by the taxpayer. The due date for filing belated returns is 31st December of the assessment year (as modified by the CBDT).
In case of advance tax returns, advanced tax payments are made in the financial year in which the income is obtained. Advance tax payment necessitates a prerequisite; it is not a tax return. Four instalment dates should be used to pay the advance tax.
- June 15th: 15% of the expected tax.
- September 15th: 45% overall.
- Cumulative 75 percent by December 15th.
- March 15th: 100 percent of the total projected tax owed.
7. Interest and Punishment
- For belated returns: Section 234F Punishment: Income dependent; ₹1,000 to ₹5,000. Losses, except for the house property loss, are not carried forward. Interest under section 234A may apply.
- For Advance Tax returns: Under Sections 234B & 234C, unpaid draws interest. If advance tax is paid in accordance with the timetable, there will be no penalty.
Conclusion
Belated returns and advance taxes play unique but important roles in India’s tax compliance system. If a taxpayer misses the initial deadline, they must file a belated return, which can incur late charges, interest and even restrictions on bringing forward losses.
Advance tax, on the other hand, is a system by which taxpayers may pay their tax obligations in instalments throughout the fiscal year, contingent on their tax liability being greater than ₹10,000. This approach enables the government to have a steady stream of money as well as lowers taxpayers’ tax expenditures at year-end.
Whereas the filing of a late return constitutes a reactive action, advance tax is a proactive approach to planning. Misinterpretation of distinctions between the two can result in compliance problems and economic penalties. One must understand this distinction in order to maintain proper, timely, and penalty-free tax control. Awareness of deadlines and requirements is empowering both individual and corporate taxpayers to meet legal requirements and efficiently manage finances.
