Why You Should File Your Income Tax Return
On Time — And Why It Matters More Than Ever
Assessment Year 2026-27 | Financial Year 2025-26
(Governed by the Income Tax Act, 1961)

Filing your Income Tax Return (ITR) is not merely a legal obligation — it is a powerful financial tool that works in your favour when done within the prescribed due date. Many taxpayers delay or overlook their returns, often unaware of the significant benefits they forfeit. This article from Sankar Kumar Associates highlights the key advantages of timely ITR filing for Assessment Year 2026-27, the applicable due dates, and importantly, the expanded mandatory filing criteria under Section 139(1) and its Seventh Proviso.

Note: AY 2026-27 relates to income earned during Financial Year 2025-26 (April 1, 2025 to March 31, 2026). Even though the Income Tax Act, 2025 (ITA 2025) has come into force from April 1, 2026, the return for AY 2026-27 is entirely governed by the Income Tax Act, 1961, as confirmed by the Income Tax Department. All section references in this article are accordingly under the IT Act, 1961.

1. Due Dates for Filing ITR — Assessment Year 2026-27
The following due dates are prescribed under Section 139(1) of the Income Tax Act, 1961 for AY 2026-27. Budget 2026 has introduced a new extended deadline of 31st August 2026 for non-audit business/professional taxpayers filing ITR-3 or ITR-4, and has also extended the Revised Return deadline to 31st March 2027:

S.No. Category of Taxpayer Due Date for AY 2026-27 Applicable Provision (IT Act, 1961)
1 Individuals, HUF, AOP, BOI — Accounts NOT required to be audited (ITR-1 / ITR-2) 31st July 2026 Sec 139(1), IT Act, 1961
2 Individuals / Professionals with Business / Professional income — NOT subject to Tax Audit (ITR-3 / ITR-4) [New — Budget 2026] 31st August 2026 Sec 139(1), IT Act, 1961
3 Businesses / Professionals — Accounts required to be audited under Section 44AB (ITR-3 / ITR-5 / ITR-6) 31st October 2026 Sec 139(1) r/w Sec 44AB
4 Partner of a Firm where Firm is subject to Tax Audit under Section 44AB 31st October 2026 Sec 139(1), IT Act, 1961
5 Companies (Domestic & Foreign) — NOT subject to Transfer Pricing Report (ITR-6) 31st October 2026 Sec 139(1), IT Act, 1961
6 Taxpayers subject to Transfer Pricing Report under Section 92E 30th November 2026 Sec 139(1) r/w Sec 92E
7 Belated Return — All categories (if original return not filed within due date) 31st December 2026 Sec 139(4), IT Act, 1961
8 Revised Return — Correction of errors in original / belated return [Extended — Budget 2026] 31st March 2027 Sec 139(5), IT Act, 1961
9 Updated Return (ITR-U) — Voluntary disclosure of additional income 31st March 2031 (48 months from end of AY 2026-27) Sec 139(8A), IT Act, 1961

Note: The above due dates are as per the Income Tax Act, 1961 and Budget 2026 notifications. The Government may extend due dates through official CBDT notifications. Always verify the latest due dates on the official Income Tax portal: www.incometax.gov.in

2. Mandatory Filing of ITR — Who Must File?
Under Section 139(1) of the Income Tax Act, 1961, the following are required to mandatorily furnish a return of income on or before the applicable due date:

2.1 General Mandatory Categories
1. Every Company and every Firm — irrespective of whether any income has been earned or a loss has been incurred during the year.
2. Every individual, HUF, AOP or BOI — if the total income (before deductions under Chapter VI-A) during the previous year exceeds the basic exemption limit.
3. Every person who is required to furnish a return in respect of the income of another person (e.g., guardian filing on behalf of a minor).
4. Every resident individual who holds any asset (including financial interest in any entity) outside India, has signing authority in any account outside India, or is a beneficiary of any asset outside India.

2.2 Mandatory Filing under the Seventh Proviso to Section 139(1) — High-Value Transactions [w.e.f. AY 2020-21]
The Finance (No. 2) Act, 2019 inserted the Seventh Proviso to Section 139(1) of the IT Act, 1961, operative with effect from 1st April 2020 (i.e., from AY 2020-21). This is one of the most significant expansions of the mandatory ITR filing obligation in recent years.

Under this proviso, even a person whose total income is BELOW the basic exemption limit is required to mandatorily file an ITR if he/she has undertaken any one or more of the high-value transactions specified in the proviso or notified by the CBDT under clause (iv) thereof. It is sufficient to satisfy even ONE condition out of the seven listed below.

Important: This provision applies only to persons falling under clause (b) of Section 139(1) — i.e., Individuals, HUF, AOP, BOI and Artificial Juridical Persons. It does not apply separately to Companies and Firms, as they are already mandatorily required to file returns in every case.

The complete list of mandatory conditions under the Seventh Proviso and Rule 12AB of the Income Tax Rules, 1962 is as under:

S.No. Clause Condition / Transaction Threshold Limit
PART A: Conditions under Section 139(1) — Seventh Proviso to the IT Act, 1961 [Inserted by Finance (No. 2) Act, 2019 w.e.f. 01-04-2020]
1 Clause (i) Deposits in one or more Current Accounts maintained with a Banking Company or a Co-operative Bank Aggregate deposits exceeding Rs. 1 Crore during the previous year
2 Clause (ii) Expenditure incurred on travel to a foreign country — for self or for any other person Aggregate expenditure exceeding Rs. 2 Lakh during the previous year
3 Clause (iii) Expenditure incurred on consumption of electricity Aggregate expenditure exceeding Rs. 1 Lakh during the previous year
4 Clause (iv) Any other conditions or transactions as may be prescribed by the Central Board of Direct Taxes (CBDT) As notified — see Part B below (Rule 12AB of IT Rules, 1962)
PART B: Additional Conditions notified under Clause (iv) of the Seventh Proviso — Rule 12AB of IT Rules, 1962 [Inserted vide CBDT Notification No. 37/2022 dated 21-04-2022, w.e.f. AY 2022-23]
5 Rule 12AB(i) Total Sales, Turnover or Gross Receipts from Business Exceeds Rs. 60 Lakh during the previous year
6 Rule 12AB(ii) Total Gross Receipts from Profession Exceeds Rs. 10 Lakh during the previous year
7 Rule 12AB(iii) Aggregate of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) during the previous year — in the case of the person Rs. 25,000 or more [For resident Senior Citizens (60 years or more): Rs. 50,000 or more]
8 Rule 12AB(iv) Aggregate deposits in one or more Savings Bank Accounts with any Banking Company, Co-operative Bank, or Post Office Rs. 50 Lakh or more during the previous year

Note: Satisfying even ONE of the above 7 conditions (Clauses i to iii of the Seventh Proviso + Rule 12AB conditions i to iv) is sufficient to make ITR filing mandatory, regardless of income level. There is a specific field in ITR Part A — General Information asking: ‘Are you filing return of income under the Seventh Proviso to Section 139(1) but otherwise not required to furnish return of income?’ — this should be ticked ‘Yes’ in such cases.

2.3 Other Specific Mandatory Situations
In addition to the above, ITR filing is also mandatory in the following situations:
✔ Persons claiming TDS / TCS refunds — even if income is below the basic exemption limit.
✔ Persons who have incurred a loss under any head of income and wish to carry it forward to future years.
✔ Persons in receipt of income from property held under trust or other legal obligations for charitable / religious purposes, political parties, research associations, news agencies, educational institutions, hospitals, trade unions, provident funds, etc.
✔ Persons required to furnish a report under Section 92E (Transfer Pricing) in respect of international or specified domestic transactions.
✔ Persons receiving notice under Section 142(1) or Section 148 / 148A of the IT Act, 1961.

3. Key Advantages of Filing ITR Within the Due Date

3.1 Avoid Late Filing Fee under Section 234F
Filing after the due date attracts a mandatory late fee under Section 234F of the IT Act, 1961:
✔ Rs. 5,000 if total income exceeds Rs. 5 lakhs.
✔ Rs. 1,000 if total income is up to Rs. 5 lakhs.
Filing within the due date saves you from this automatic penalty — no exceptions, no waivers.

3.2 Carry Forward of Losses — A Critical Benefit
This is one of the most significant and often overlooked advantages of timely filing. Under the IT Act, 1961:
✔ Losses under the heads ‘Capital Gains’ and ‘Business/Profession’ can be carried forward to set off against future income ONLY if the ITR is filed on or before the due date under Section 139(1).
✔ If you file a belated return (after the due date), the right to carry forward such losses is permanently lost — except for loss under the head ‘House Property’, which can still be carried forward.
For investors, traders, and business owners, losing this benefit can have significant tax implications in subsequent years.

3.3 Avoid Interest under Section 234A
Interest under Section 234A is levied @ 1% per month (or part of a month) on the outstanding tax amount, from the due date of filing until the actual date of filing. Every month of delay adds to your tax cost. Filing on time eliminates this interest burden entirely.

3.4 Faster Refund Processing
If excess TDS has been deducted or advance tax paid, timely filing ensures faster processing of refund by the Central Processing Centre (CPC), Bengaluru. Interest on refund under Section 244A is available, but prompt filing avoids delays in credit to your bank account.

3.5 Option to Choose Old Tax Regime
The New Tax Regime is the default regime under Section 115BAC of the IT Act, 1961. If you wish to opt for the Old Tax Regime — to claim deductions like Section 80C, 80D, HRA exemption, home loan interest under Section 24(b), etc. — you must file your ITR on or before the due date. Filing a belated return means you permanently lose the option to choose the Old Tax Regime for that year.

3.6 Revised Return Facility — Extended to 31st March 2027 (Budget 2026)
Budget 2026 has extended the Revised Return deadline under Section 139(5) from 31st December to 31st March 2027 for AY 2026-27. A late fee is applicable if the revised return is filed after 31st December 2026. This allows correction of mistakes — missed deductions, TDS mismatches, or forgotten income.

3.7 Loan and Visa Applications Made Easy
✔ Strengthens home loan, personal loan, and business loan applications.
✔ Serves as income proof for visa applications to the USA, UK, Canada, Australia, Schengen countries, etc.
✔ Demonstrates financial discipline and creditworthiness.

3.8 Clean Trail for Capital Gains and Property Transactions
Consistent timely filing creates a clean audit trail for capital gains computation, cost of acquisition, and indexed cost claims. It also significantly reduces the risk of scrutiny notices for unexplained investments or wealth accumulation.

3.9 Voluntary Compliance and Good Standing
✔ Reduces the probability of being selected for scrutiny assessment.
✔ Demonstrates voluntary compliance — viewed favourably during any inquiry or verification.
✔ Maintains a clean compliance history for government tenders, professional licences, and regulatory approvals.

3.10 Eligibility for Updated Return (ITR-U) at Lower Additional Tax
Under Section 139(8A) of the IT Act, 1961, taxpayers can voluntarily disclose any previously unreported income by filing an Updated Return (ITR-U) within 48 months from the end of the relevant Assessment Year. For AY 2026-27, ITR-U can be filed up to 31st March 2031. Budget 2026 further provides that filing ITR-U with payment of tax, interest, and the additional levy now grants immunity from penalties for under-reporting or misreporting of income.

4. Consequences of Late Filing or Non-Filing
To fully appreciate the advantages of timely filing, it is equally important to understand the consequences of default:

Default / Delay Consequence (IT Act, 1961)
Late filing after due date Late fee up to Rs. 5,000 under Section 234F, IT Act, 1961
Tax unpaid as on due date of filing Interest @ 1% per month (or part thereof) under Section 234A, IT Act, 1961
Belated return (filed after due date) Loss of right to carry forward Capital Gains losses and Business/Profession losses (loss from House Property can still be carried forward)
Filing belated return — Tax Regime choice Mandatory taxation under New Tax Regime; option to choose Old Tax Regime (with deductions like 80C, 80D, HRA, Sec 24(b)) is permanently lost for that year
Wilful failure to furnish return Prosecution: Rigorous imprisonment of 3 months to 7 years + fine under Section 276CC, IT Act, 1961

5. Practical Checklist for Timely ITR Filing — AY 2026-27
✔ Reconcile Form 26AS, AIS (Annual Information Statement), and TIS (Taxpayer Information Summary) with your books and bank statements before filing.
✔ Collect Form 16 / Form 16A from employers and all deductors.
✔ Check whether you are covered by the Seventh Proviso to Section 139(1) or Rule 12AB — even if your income is below the basic exemption limit.
✔ For taxpayers with audit requirement, initiate Tax Audit process at least 6 to 8 weeks before the due date. Tax Audit Report submission deadline is 30th September 2026 for 31st October ITR cases.
✔ Verify pre-filled data on the ITR portal — TDS credits, dividend income, interest income, and capital gains pre-populated from AIS.
✔ Decide between Old and New Tax Regime before filing. If opting for Old Regime, the ITR MUST be filed before the due date.
✔ E-verify your return within 30 days of filing to complete the process. An unverified return is treated as not filed.
✔ Consult your Chartered Accountant early to optimise deductions and ensure accurate computation.

6. Conclusion
Filing your Income Tax Return within the prescribed due date is one of the simplest and most impactful financial decisions you can make each year. With the expanded mandatory filing criteria under the Seventh Proviso to Section 139(1) and Rule 12AB of the IT Rules, 1962, a significantly larger number of taxpayers are now legally required to file their returns — even if their income is below the taxable limit. The advantages of timely filing — from avoiding interest and penalties, protecting loss carry-forwards, and securing your Old Tax Regime choice, to strengthening loan applications and maintaining voluntary compliance — far outweigh any inconvenience.

For Assessment Year 2026-27, the key due dates are 31st July 2026 for salaried individuals, 31st August 2026 for non-audit business/professional taxpayers, and 31st October 2026 for audit cases. Start early, gather your documents, reconcile your TDS and AIS data, and file on time.

For professional assistance with your Income Tax Return filing, contact Sankar Kumar Associates — Chartered Accountants, Nagarampalem, Guntur, Andhra Pradesh.

Published by Sankar Kumar Associates | June 2026
Source: www.incometax.gov.in | Budget 2026 | IT Act, 1961 | IT Rules, 1962
Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. Readers are advised to consult their tax adviser for situation-specific guidance.