Income Tax Bill 2025: Will Late ITR Filing Affect Your Refund? Key Changes Explained
The government has recently introduced the new Income Tax (I-T) Bill, 2025, which aims to replace the outdated tax law of 1961.
While this new bill promises to simplify the tax system, there are a few important aspects taxpayers should be aware of, especially concerning refunds for late filings.
A Simpler Tax System
The proposed I-T Bill will make it easier for taxpayers, particularly salaried individuals, to understand and comply with the tax rules.
Tax expert Vivek Jalan from Tax Connect Advisory Services LLP mentions that Clauses 15 to 19 will now consolidate all salary-related provisions.
This streamline eliminates the need for taxpayers to refer to different chapters for filing returns, making the process more straightforward.
Language and Structure Overhaul
The new bill features clearer and more straightforward language, with difficult jargon removed and replaced by simple terms.
Tax expert Sandeep Jhunjhunwala from Nangia Andersen LLP notes that government cut unnecessary sections, provisos, and explanations, making the bill easier to comprehend.
The bill will also utilize tables and formulas to assist taxpayers in understanding the tax calculations, according to chartered accountant Suresh Surana.
This move is expected to enhance compliance, as taxpayers are more likely to file their returns correctly with a simplified system.
For those who enrolled in the new tax regime, there will be no need to re-select it, and the bill will not affect existing tax liabilities or refund claims.
Late Filing May Lead to No Refunds
Currently, taxpayers can file their income tax refund returns until December 31 of the relevant assessment year.
However, under the proposed I-T Bill, 2025, the deadline for filing these returns will align with the timeline set in Section 263(1), similar to the existing Section 139(1).
Tax expert Suresh Surana highlights that this change means taxpayers who fail to file within the stipulated time frame will no longer have the opportunity to claim a refund.
This rule is aimed at promoting discipline in tax filing, but it could pose a challenge for those who miss the deadline due to genuine reasons.
Jalan acknowledges this concern, noting that a delay in filing could become problematic if it’s due to valid circumstances.
Moreover, taxpayers might initially find it challenging to navigate the new I-T Bill, especially with changes in section numbering, provision relocations, and new schedules for allowances and deductions.
Surana also points out that the I-T portal will need significant updates to accommodate the changes in the new bill.
Key Changes to Tax Saving and TDS Rules
The bill introduces several updates to tax-saving and TDS (Tax Deducted at Source) provisions:
- – Section 80C: Tax-saving instruments are now present in a simple table in Schedule XV.
- – Section 80G: The authorities will categorize donations into 100% and 50% deductible groups.
- – Section 80TTA and 80TTB: These provisions relating to interest income deductions, especially for senior citizens, consolidate into one section with clear guidelines.
Also Read: https://investcly.com/pnbq-and-upix-financial-news-roundup-profit-fraud-and-upi-issues/