While the Central Board of Direct Taxes has extended the deadline to file income tax returns for AY 2025-26 to September 15, 2025, an assessee should not delay paying the additional tax due until the due date of ITR filing. Delaying tax payment will result in additional interest charges under Sections 234B and 234C of the Income Tax Act.
Interest under Section 234C is computed till March 31 of the year and is applicable on shortfall in payment of advance tax by that date.
On the other hand, interest under Section 234B is applicable if advance tax paid is less than 90% of the total tax liability and is computed starting from April 1 of the subsequent year till the date when the return is filed.
Vishwas Panijar, partner, Nangia Andersen, says, interest at the rate of 1% is calculated on the whole month (even if the delay is for a part of the month). “If a return is filed, for instance, on August 2, interest under Section 234C would be applicable for the whole month of August,” he says.
Avoid last-minute rush
Filing tax returns before July 31 is still advisable. This helps avoid the last-minute rush and potential technical issues on the e-filing portal, which faces heavy traffic closer to the deadline. Sandeep Sehgal, partner, Tax, AKM Global, a tax and consulting firm, says this allows ample time to review financial documents, reconcile your Annual Information Statement and Form 26AS, and rectify any discrepancies, minimising errors that could lead to tax notices or delayed processing.
Changes in capital gains
Previously, taxpayers with any capital gains (even exempt ones) were ineligible to use ITR-1 or ITR-4 forms. This year, individuals and HUFs can file ITR-1 or ITR-4 even if they have long-term capital gains (LTCG) from listed equity shares and equity-oriented mutual funds up to Rs 1.25 lakh (under Section 112A), provided there are no brought forward or carried forward capital losses.
If income (other than salary) has tax deducted at source (TDS), assessees will now need to mention the specific TDS section (e.g., 194J, 194C, etc.) under which the tax was deducted, to claim the tax credit.
In fact, the new capital gains rules introduced in Budget 2024 (effective July 23, 2024) mandates reporting the date of transfer of capital assets. Gains from transfers before July 23, 2024, will follow old rules such as indexation benefits, concessional rates, while gains from transfers on or after July 23, 2024, will be subject to new norms.
Simpler forms (ITR-1/ITR-4) can be used for small LTCG (up to ?1.25 lakh) if no losses are carried forward. For real estate, Budget 2024 introduced revised taxation rules for real estate effective July 23, 2024. For real estate transfers on or after this date, taxpayers have an option to pay LTCG tax at 12.5% without indexation, or continue with 20% with indexation benefit. The assessee must compare and choose the more beneficial option.
Gains are classified as Short-Term (STCG) or Long-Term (LTCG) based on holding period. For listed equity and equity mutual funds, STCG is taxed at 15%. LTCG exceeding Rs 1 lakh (or Rs 1.25 lakh for transfers after July 23, 2024) is taxed at 12.5% without indexation.
Information for claiming deductions
For those opting for the old tax regime, the ITR utilities now demand more detailed information for claiming various deductions. Taxpayers claiming HRA exemption will have to disclose whether their place of work is in a metro or non-metro city, which will impact the HRA computation.
For deduction under Section 24(b) interest payment for home loan, the assess has to disclose the name of the lender, loan account number, date of loan sanction, total sanctioned loan amount and outstanding loan balance. Taxpayers must keep their home loan interest certificates handy while filing.For deductions under 80C, an assessee will have to mention policy or certificate numbers for life insurance, public provident funds, etc.
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