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People with less income always think they are exempt from filing returns, but that’s not the case. There are other criteria beyond how much you earn that require filing an ITR. Failing to file ITRs on time can lead to consequences.
Not filing an ITR on time can have numerous consequences, from penal interest and late fees to possible jail time. Meanwhile, if you file your return within the period for filing a belated return and after the deadline, you will be charged a late fee and interest.
Let’s take a look at the consequences of not filing income tax returns on time:
Interest Penalty:
If you fail to pay your taxes on time, you must pay interest on the unpaid amount at a rate of 1% per month under Section 234A. Interest is calculated from when you file your tax return for the corresponding fiscal year until the deadline.
Late fee: Filing your ITR beyond the deadline will result in a late filing fee. If you do not file your ITR by the deadline, you will be charged Rs 5,000 as a late fee under Section 234F. If your annual income is less than Rs 5 lakh, the late fee will be limited to Rs 1,000.
Delayed Refunds: If there is an Income Tax refund due, it will be paid when the ITR is filed and verified.
Loss of Carry Forward Losses: If the Income Tax Return is filed before the deadline, losses can be carried forward to subsequent years. These losses may be used to offset future earnings. If you file your ITR after the deadline, you will be unable to carry over these losses. If a person submits an Income Tax Return after the deadline, he or she will not be eligible to carry forward the losses.
Choosing Tax Regime: If an individual misses the deadline for filing their ITR, the belated ITR will be processed under the new tax regime.
Loan Rejection: Several financial institutions accept ITRs as proof of income. Not filing it can reduce your chances of securing a loan.
(Edited by : Sudarsanan Mani)
First Published: Jan 8, 2025 1:42 PM IST
