Tax Troubles Unleashed: Consequences Of Not Filing ITR!

The date is near!

Did you file your ITR yet? 

In this blog, we dive into an important topic that everyone should be aware of: the penalty of not filing ITR. It’s crucial to understand the consequences that can arise from neglecting your tax obligations. Whether you’ve missed the deadline or haven’t filed for a while, this blog will shed light on the potential repercussions. We will explore the penalty landscape for non filing of ITR and uncover insights that every taxpayer should know. 

Income Tax Returns Filing Deadlines

CATEGORY OF TAXPAYER	INCOME TAX RETURN FILING DUE DATE
Individual / HUF/ AOP/ BOI     ( income tax return filing last date for salaried employees)	31st July, 2023
Businesses Requiring Audit	31st October, 2023
Businesses Requiring transferring pricing reports	30th November, 2023
Revised Return	31st December, 2023
Belated/Late Return	31st December, 2023

What Happens if you don’t file ITR? 

penalty charges

One of the primary repercussions of failing to file an ITR before the income tax return date is the imposition of a penalty. According to Section 234F, if you exceed the due date for filing the return, the late fee can range from Rs 5,000 to Rs 10,000. However, if your annual income is below 5 lakh, the late fees are limited to Rs 1,000. It’s important to note that if your gross income is below the basic exemption limit, you won’t be penalised for late filing.

Inability to revise ITR

While you can revise your ITR multiple times as long as the initial return is filed, this flexibility is lost if you fail to file the initial ITR on time. Hence, when submitting a delayed ITR, ensure its accuracy as no changes can be made in a delayed return.

Submitting a delayed ITR? Ensure accuracy, as changes can’t be made.

‘No carry forward’ of losses

Any incurred losses in your investments, can be utilized to offset future profits and reduce your tax liability. However, if you fail to report these losses in your ITR and file the return on time, you won’t be able to carry them forward for future offsetting. It’s worth noting that losses related to house property can still be carried forward. 

Interest on the tax amount

Under Section 234A, you are also liable to pay interest at a rate of 1% per month on the outstanding tax amount. This interest is calculated from the date you file your return for the relevant fiscal year to the due date.

For instance, if you have a tax due of Rs 2 lakh for the fiscal year 2022-2023 and you paid it in March 2025 (a seven-month delay), the interest would amount to Rs 14,000 (2 lakhs × 7%). The tax liability will be increased over time as the interest is added.

Rigorous punishment

Failing to file an ITR before the due date can lead to the tax department considering it a tax evasion. As per Section 270A, they have the authority to impose a penalty equal to 50% of the tax evaded due to non-filing of the return. Additionally, taxpayers may face imprisonment for 3 months to 2 years, along with an additional penalty charge based on the amount of tax evaded.

What is the Importance of filing ITRs 

• While applying for loans for a car/house purchase the ITR of past 3 years is mandatory. 
• Submitting IT returns enables quick visa approval and processing. To process VISA, some foreign embassies including Australia, UK, USA & Canada require ITR receipts from previous year. 
• Under Section 281 of Income Tax Act, for foreign & high value transactions, you will need to provide a tax clearance certificate (ITR). 
• It allows you to claim tax refunds if applicable.
• Documents regarding ITR are essential as they serve both as income and address proof. These documents demonstrate information about your earnings from salary and details more accurately from Form 16. 
• ITR for the last few years act as a vital piece of information if you take up any government projects. 
• Filing ITR assists companies in avoiding any kind of tax penalties. 

Way Forward

In conclusion, it is clear that every individual and company needs to file their income tax returns on time to avoid any inconveniences. So, consider the important dates above and prepare to file your tax returns while adhering to the rules and regulations of the country.