Why filing ITR early is a smart choice: Faster refunds to old regime option and carry forward of losses

Benefits of early ITR filing

The last-hour rush to file income tax returns often leaves the assesses dealing with heavy traffic on the ITR portal, and other delays.

On September 15, nearly 61 lakh Income Tax Returns (ITRs) were filed, taking the total count to 7.3 crore surpassing last year’s figure of 7.28 crore. Last year, the e-filing portal had processed close to 70 lakh returns in just 24 hours during the final days, and a similar rush was witnessed this year as well.

Last-day Rush for ITR

The heavy traffic has thrown up challenges for taxpayers and professionals, who have reported portal slowdown, delays in downloading AIS and Form 26AS, and glitches in the verification process. To ease the situation, the Central Board of Direct Taxes (CBDT) had extended the ITR filing deadline by a day, until September 16, 2025.

This extension, however, should serve as a reminder that procrastinating until the last date creates unnecessary stress and risk. For salaried individuals, filing ITR early after Form 16 is issued and the tax department releases updated utilities ensures a smoother, hassle-free experience.

“Filing closer to the deadline does have problems,” Sujit Bangar, Founder, Taxbuddy.com said. “The income tax portal can slow down or even freeze because of high traffic. Aadhaar OTPs may get delayed, portal maintenance can disrupt submissions, and technical errors may crop up. On top of that, the last-minute stress of gathering income details and deduction proofs often leads to mistakes, and you may lose benefits like setting off losses. Filing early reduces stress and ensures accuracy.”

Advantages of Early ITR filing

It allows for carrying forward losses, late fee is avoided, and the taxpayer can receive refunds, if any, faster. “Although refunds don’t have fixed timelines, the process is much quicker now,” Bangar said. “Earlier, it used to take up to 90 days after processing. Today, if you file within the deadline, verify quickly, and have a linked bank account, refunds can arrive in a few weeks or even a single day. The earlier you file, the better.”

Traditionally, the last date for filing ITRs has been July 31, but this year, the deadline was extended to September 15, 2025 because of changes introduced in the Finance Act, 2024 (Part II). These changes required updates to ITR forms, including reporting of capital gains based on specific dates and providing document numbers for certain deductions under the old tax regime. The extension gave both taxpayers and the system time to adjust to these new requirements.

What To Do if You Miss the ITR Due Date

“If you do not file your ITR within the due date, there are two major consequences. First, the New Tax Regime is the default regime. To opt for the old regime, you must make this choice while filing your return within the due date. If you miss the deadline, you will mandatorily fall under the new regime. Second, you may lose valuable tax benefits such as the ability to carry forward losses,” said Balwant Jain, a Mumbai-based Chartered Accountant.

In addition, interest charges under different provisions of the Income Tax Act also come into play. Under Section 234A, if you miss the due date and still have unpaid taxes, you will be charged 1% interest per month (or part thereof) on the outstanding amount, calculated from September 17 until the date of filing.

Under Section 234B, if your advance tax paid by March 31, 2025 is less than 90% of your total liability, you are required to pay interest at 1% per month from April 1, 2025 until the date of actual payment or ITR filing, whichever is earlier. Finally, if you fail to file your return by September 15, a mandatory late fee under Section 234F will apply up to Rs 5,000, though if your taxable income is below Rs 5 lakh, the penalty is capped at Rs 1,000.

While extensions by the tax department offer temporary relief, early filing remains the smarter choice, according to experts, as it ensures accuracy, reduces stress, and ensures refund is processed faster.