Missed ITR deadline and want to claim a refund? What happens if you have an outstanding tax demand

Missing the income tax return (ITR) filing deadline does not necessarily mean you lose the opportunity to claim a tax refund. If excess tax was deducted through TDS or paid through advance tax or self-assessment tax, taxpayers can still claim the refund by filing a return later.

However, there may also be cases where you do not receive the refund at all because you have an outstanding tax demand from a previous year.

For most salaried individuals, the ITR due date was July 31, while professionals and businesses (non-audit cases) had time until August 31.

You can still file a belated return

Those who could not complete their income tax filing within the original due dates set by the income tax department, have the option to file a belated return by December 31st of the relevant assessment year.

The tax department begins processing a refund only after the taxpayer has filed the return and completed e-verification. If either step is not completed, the taxpayer may not be able to receive the refund.

Usually, it takes about four to five weeks for the refund to be credited to the taxpayer’s account, according to information on the tax department’s website.

Can your refund be refused?

No, if you are entitled to a tax refund, the income tax department cannot refuse it, provided you have complied with the requirements.

However, it must be noted that in cases where a taxpayer has an outstanding tax demand from a previous year, the tax department can adjust the refund against that unpaid demand.

As a result, the refund you are expecting for AY 2026-27 could be partially reduced or completely absorbed against dues from previous years.

When is TDS deducted?

The concept of tax deducted at source (TDS) was introduced with an aim to collect tax from the very source of income.

As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government.

The deductee from whose income tax has been deducted at source, is entitled to receive credit for the amount deducted on the basis of Form 26AS or TDS certificate issued by the deductor.

For example, if you buy a car with an ex-showroom price of ₹15 lakh, the dealer would collect 1% TCS, or ₹15,000, on the sale. This ₹15,000 can be claimed as tax credit by the buyer while filing the ITR.

How to claim a refund after due date

To receive an income tax refund, taxpayers must ensure that certain conditions are fulfilled. The income tax department processes refunds only after the return is filed correctly and the taxpayer’s PAN, Aadhaar and e-filing account details are properly linked and active. Here’s what you need:

• Valid User ID and Password
• PAN is linked with the Aadhaar number
• ITR filed claiming a refund

Filing late ITR isn’t free

Filing a belated return is allowed, but it is not completely free of cost. Taxpayers with total income above ₹5 lakh should pay a late filing fee of up to ₹5,000 and those with an income of up to ₹5 lakh, the maximum fee is ₹1,000.

If you have outstanding tax dues and yet fail to file your ITR by the due date, then you will also have to pay interest under the Section 234A of the Income-tax Act.

A simple interest of 1% per month or part of the month is charged on the unpaid tax amount. The interest is calculated from the applicable ITR due date for the relevant financial year until the date the return is actually filed.