ITR Filling 2025: Good News For Taxpayers As Select Committee Proposes Relief For Late Tax Filers

The Lok Sabha Select Committee recommended limiting deduction disallowance for late income tax returns to only Heading C of Chapter VIII, as per existing law.

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New Delhi: If you miss the income tax filing deadline, you may soon have a better chance at getting your refund and not losing out on common deductions Money Control Reported.

Right now, if you file your tax return late, some deductions (especially those for special kinds of income, like royalties or new jobs created) are not allowed. This only applies to a specific group of deductions called "Heading C" under Chapter VIII of the income tax rules.

The new draft law had proposed a much stricter rule. It would have denied all deductions listed in Chapter VIII if you file late—including common ones for life insurance, health insurance, education loans, and donations. This could have meant much higher taxes for people who miss the deadline, even by accident.

A Lok Sabha committee spotted this problem and recommended a fix. They said the rule should stay the same as it is now: only deductions under "Heading C" would be denied if you file late. The usual deductions most people claim—such as for insurance payments or donations—would still be available, even if the return is filed after the deadline.

Why does this matter? Many people owe no additional tax and are only due a refund because of extra TDS, but sometimes file late. If the stricter rule had been adopted, they could lose all their routine deductions and their refund—just for missing the deadline by a day or two.

If Parliament accepts the Committee's recommendation, late filers will not face harsher penalties than they do now. You will still be able to claim regular deductions and get your refund, unless you repeatedly file late or have other major problems.

The changes aim to be fair to ordinary taxpayers, especially salaried workers and small earners. The Lok Sabha Select Committee’s report was officially submitted on July 21, 2025, as part of the review of the new Income Tax Bill.