The Missed Deadline Rule That Cancels Your Tax Deductions

When it comes to saving taxes, most individuals and businesses rely on deductions provided under various provisions of the Income Tax Act. From Section 80C to Section 80IA, these deductions significantly reduce taxable income. However, many taxpayers overlook an important compliance rule: Section 80AC of the Income Tax Act.

This section makes it clear that deduction not to be allowed unless return furnished on or before the due date specified under Section 139(1). Missing the deadline means losing the right to claim valuable deductions—even if the investments or expenditures were eligible.

Let’s break down this section, understand its impact, & see how you can ensure compliance to maximize your deductions.

What is Section 80AC of Income Tax Act?

Section 80AC was inserted to ensure strict discipline in filing income tax returns. It states that no deduction would be admissible under sections 80IA, section 80-IB, section 80-IC, and other similar provisions if the taxpayer has not filed the return of income within the prescribed due date.

In simple terms, if you invest in eligible schemes, make donations, or spend on activities that qualify for tax deductions, you will not be able to claim them unless your return is filed on time. Hence, deduction not to be allowed unless return furnished becomes the rule of law.

Why Was Section 80AC Introduced?

The government realized that many taxpayers were making last-minute claims or filing delayed returns while still availing deductions. This created compliance issues & disputes with tax authorities.

To encourage punctuality and reduce manipulation, Section 80AC was enforced. Its key objectives include:

• Ensuring timely filing of returns by all taxpayers.
• Preventing misuse of deduction claims through backdated or late filings.
• Strengthening compliance discipline.
• Making the process transparent & consistent for all.

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Applicability of Section 80AC

Section 80AC applies to all taxpayers who wish to claim deductions under Chapter VI-A of the Income Tax Act. This includes:

• Individuals claiming deductions under 80C, 80D, 80G, etc.
• Businesses availing deductions under 80IA, 80IB, 80IC, and similar sections."
• Companies and firms seeking benefits under specific investment or expenditure-linked deductions.

So, whether you are a salaried individual or a large company, deduction not to be allowed unless return furnished applies equally.

Also Read: Your Guide to Tax Benefits on Charitable Donations

Example to Understand Section 80AC

Let’s take an example:

Rohit, a salaried professional, invests ₹1.5 lakh in ELSS mutual funds (eligible under Section 80C). He also pays health insurance premiums eligible under Section 80D. His total eligible deductions come to ₹2 lakh.

But Rohit files his income tax return after the due date under Section 139(1). In this case, no deduction would be admissible under section 80C or 80D because of Section 80AC. He loses the benefit of ₹2 lakh deduction, & his tax liability increases.

This is why compliance is critical.

Important Case Law Reference

The judiciary has upheld that Section 80AC is mandatory. Courts have consistently ruled that if a return is not filed within the due date, the taxpayer automatically forfeits the right to claim deductions under Chapter VI-A.

This shows that the law is strict & non-negotiable.

Impact on Businesses and Individuals

For individuals, the impact is direct—missing the due date means losing deductions like 80C, 80D, 80G, etc. For businesses, it is even more significant, since deductions under 80IA, section 80IB, and others often involve large amounts.

Thus, Section 80AC enforces discipline & ensures that deductions are claimed only by compliant taxpayers.

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Key Points to Remember

1. Deduction not to be allowed unless return furnished before the due date.
2. Applies to all deductions under Chapter VI-A, including section 80IA & other provisions."
3. No exceptions are provided in law—late filing leads to permanent loss of deductions.
4. Taxpayers must file returns on time, even if there is no liability, to preserve deduction rights.

FAQs on Section 80AC

Q1. What happens if I file my return after the due date?
You cannot claim deductions under Chapter VI-A.

Q2. Does Section 80AC apply to salaried individuals?
Yes, it applies to all taxpayers claiming deductions, whether individuals, firms, or companies.

Q3. Can the benefit be restored by filing a revised return?
No. If the original return was filed late, deductions cannot be claimed, even in a revised return.

Also Read: Diseases Covered Under Section 80D of the Income Tax Act

Conclusion

Section 80AC of Income Tax Act is a strict reminder that tax benefits are not just about investing or spending in the right areas—they also depend on compliance. By enforcing the rule that deduction not to be allowed unless return furnished, the government ensures discipline in tax filing & prevents misuse of deductions.

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