August 31 is the deadline for eligible taxpayers with business or professional income who are not required to undergo a tax audit to file their Income Tax Return (ITR) for Assessment Year 2026-27.
More than seven crore ITRs have already been filed, according to the Income Tax Department. Taxpayers who are yet to file their returns have been advised to complete the process and ensure that the return is verified.
Missing the deadline can lead to penalties and lost benefits
Taxpayers who fail to file by August 31 can still submit a belated return until December 31, 2026, or before the completion of assessment, whichever is earlier.
However, late filing may attract a fee of Rs 5,000 if total income exceeds Rs 5 lakh. Where total income does not exceed Rs 5 lakh, the late fee is capped at Rs 1,000.
Taxpayers with outstanding tax liability may also have to pay interest at 1 per cent per month or part of a month under Section 234A.
Late filing can also delay refunds and affect the ability to carry forward certain eligible business or capital losses. Taxpayers who are eligible to opt for the old tax regime must also ensure that they meet the prescribed deadline.
Choosing the right ITR form is crucial
Individuals and Hindu Undivided Families (HUFs) earning income from business or profession generally need to use ITR-3, while eligible taxpayers covered under the presumptive taxation provisions may use ITR-4.
Taxpayers should carefully check their eligibility before selecting the form. Freelancers, in particular, should not assume that they automatically qualify for the presumptive taxation scheme under Section 44ADA, as it applies only to specified professions and prescribed conditions.
Reconcile income and tax details before filing
Taxpayers should cross-check their income and tax deductions with the Annual Information Statement (AIS), Form 26AS, bank transactions, invoices and books of accounts before submitting the return.
Those earning income from overseas clients should also check whether their foreign income, bank accounts or other foreign assets need to be disclosed in the relevant schedules.
Taxpayers should also determine whether their turnover or gross receipts make them liable for a tax audit and ensure that all eligible business expenses are properly reported.
With the August 31 deadline in effect, taxpayers yet to file their returns should avoid waiting until the last minute and complete both filing and verification within the prescribed time.