August 31 is the deadline for eligible taxpayers with business or professional income who have not undergone a tax audit to file their Income Tax Return (ITR) for Assessment Year 2026-27. With more than seven crore returns already filed, taxpayers who are yet to complete the process should act quickly and remember that filing the return is not enough— it must also be verified.
Those filing ITR-3 or ITR-4 should carefully select the appropriate form, report income correctly, and reconcile their information with the Annual Information Statement (AIS), Form 26AS, bank records and other financial documents.
Missing the deadline doesn’t mean taxpayers cannot file a return in its entirety. A delayed return would cause additional costs and loss of some benefits.
What happens if you miss the August 31 deadline?
Taxpayers who miss the due date can generally file a belated return until December 31, 2026, or before completion of assessment, whichever is earlier.
And late filing can attract a fee under Section 234F. If total income is more than Rs 5 lakh, the late filing fee is Rs 5,000. If total income is less than Rs 5 lakh, the fee is capped at Rs 1,000.
Taxpayers who have outstanding tax liabilities may also have to pay interest under Section 234A, generally 1% per month or part of a month on the unpaid tax, subject to the applicable rules.
Late filing can also affect the ability to carry forward certain losses, including eligible business and capital losses, for adjustment against future income.
Another important issue is with business and professional income taxpayers who want to use the old tax regime instead of the default new regime. Taxpayers must file by the approved deadline. Late filing the return can prevent them from opting for the old regime for that return.
Common ITR Filing Mistakes To Avoid: Choosing The Wrong ITR Form.
The correct form of ITR must be selected
ITR-3 is generally applicable to individuals and HUFs having income from business or profession who do not qualify for ITR-4.
ITR-4, or Sugam, can be used by eligible resident individuals, HUFs and firms other than LLPs that meet the conditions for presumptive taxation under Sections 44AD, 44ADA or 44AE.
As a result, taxpayers should examine their income sources and eligibility before selecting a form.
Assuming every freelancer qualifies for Section 44ADA
Freelancers should not automatically assume that they can use Section 44ADA.
The provision applies to specified professions, including legal, medical, engineering, architectural, accountancy, technical consultancy and interior decoration, subject to applicable conditions.
For eligible professionals, presumptive income is generally taken at 50% of gross receipts, subject to the prescribed limits.
Section 44AD applies to eligible businesses and operates under separate conditions. Its general turnover limit is Rs 2 crore, increasing to Rs 3 crore where cash receipts do not exceed 5% of total receipts. Certain businesses, including commission or brokerage and agency businesses, are excluded.
Selecting The Wrong Tax Regime
The new tax regime will be the default for individuals and all other eligible taxpayers with business or professional income.
Those who wish to opt for the old regime need to comply with the prescribed requirements, including filing Form 10-IEA within the applicable deadline.
Taxpayers should not think that they can simply pick their preferred regime while filing a belated return.
Claiming Personal Expenses As Business Expenses
Self-employed taxpayers should clearly distinguish business expenditure from personal spending.
Only expenses incurred wholly and exclusively for business or profession should generally be claimed. At the same time, taxpayers should not neglect legitimate expenses such as software subscriptions, professional fees, office expenses, business-related internet costs and depreciation on eligible equipment.
Maintaining proper supporting records is important.
Not Reconciling AIS And Form 26AS
One of the common filing problems is failing to reconcile reported income and tax deductions.
Taxpayers should compare their ITR details with:
Annual Information Statement (AIS)
- Form 26AS
- Bank statements
- Invoices and receipts
- Books of accounts
- TDS certificates
Differences may arise because of timing issues, incorrect reporting by clients, or other data mismatches. Identifying discrepancies before submitting the return can reduce the possibility of future compliance issues.
Incorrect Reporting Of Foreign Income
Business owners and freelancers receiving payments from overseas clients should check the reporting requirements applicable to their residential status.
Depending on the circumstances, foreign income, foreign bank accounts and other foreign assets may need to be disclosed through the relevant schedules.
Taxpayers claiming foreign tax credit should also comply with the applicable requirements, including Form 67 wherever required.
Ignoring Tax Audit Requirements
Business owners and professionals should determine whether their turnover, gross receipts or method of declaring income triggers a tax audit requirement.
For eligible taxpayers using Section 44AD, the general turnover threshold is Rs 2 crore, which can rise to Rs 3 crore where cash receipts remain within the prescribed 5% limit.
For non-presumptive businesses, the general tax-audit threshold is Rs 1 crore, though it can increase to Rs 10 crore where cash receipts and cash payments remain within the prescribed 5% condition, subject to other applicable requirements.
Taxpayers should also understand the restrictions associated with opting out of presumptive taxation after previously declaring income under Section 44AD.
Don't Forget ITR Verification
Filing the return online is only one part of the process. Taxpayers must also complete the verification of the ITR through an available prescribed method.
An unverified return can create complications even if the filing itself was completed before the deadline.
As the August 31 deadline approaches, eligible taxpayers should avoid waiting until the last minute. Checking the correct ITR form, tax regime, income, deductions, TDS, AIS information, foreign income, and audit applicability can help prevent avoidable errors and additional costs.
This article is for informational purposes only and should not be treated as tax or financial advice. Taxpayers should refer to the latest Income Tax Department rules and consult a qualified tax professional for advice specific to their circumstances.
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