Missing the ITR deadline: Consequences and penalties

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Late filing is invited with penalty

If you fail to meet the deadline for filing your Income Tax Return (ITR), the Income Tax Act under Section 234F imposes penalties. For the financial year 2024–25, the assessee whose income subject to tax is over ₹5 lakh has to pay a late fee of ₹5,000 if filed after due date but on or before December 31. For January 1 to March 31, the fee can be ₹10,000. For the assessee with income up to ₹5 lakh, the penalty can be ₹1,000.

Interest charges add to the burden

Besides the penalty, a delay also attracts interest on unpaid tax. According to Section 234A, interest of 1% for a month or part of a month is chargeable on the quantum of unpaid tax until the date of return due. This can add a considerable amount to your bill if you have huge sums of tax to pay. The longer the delay, the greater the interest you incur, and this will usually be higher than the penalty in most instances.

Carry-forward benefits are lost

Timely filing also determines how you can apply your losses for tax planning purposes. Not filing on time will not allow you to avail yourself of the luxury of carrying forward part of your losses such as business or capital gains to subsequent years. That is, you will have least flexibility to tinker with future incomes utilizing past losses and might lead to higher tax outflow in subsequent years.

Refunds are lost or delayed

Late filing also impacts your refunds. Refunds are issued after returns have been filed and audited. The late filing therefore automatically postpones your refund. In certain other cases, where filing is completely waived, you are denied the right to receive any refund you would otherwise be entitled to, even where much tax was withheld at source.

Delayed ITR filing attracts legal penalties

The Income Tax Department can issue notices and proceed with prosecution under wilful default. In severe cases, it can invoke a two-year jail term, coupled with penalties. Although such action is typically reserved for defaulting companies, salaried professionals and small taxpayers cannot afford to take filing lightly either.

FAQs

Q. Can I file a belated ITR if I have lost the deadline?

Yes, you can file a delayed return after the due date until March 31 of the year of assessment. You will be charged interest and penalty, and you will lose relief for the carry-forward of some losses.

Q. What if my income is less than the tax limit?

If your income falls below the exemption limit, penalty for non-filing is not required. But in case TDS has already been deducted from you and you wish to claim refund, you must file in time.

Q. Are late filing penalties avoidable?

There is no direct waiver of the penalty, although if your tax payable is below ₹5 lakh, then the penalty may not be more than ₹1,000. Timely payment of advance taxes and self-assessment taxes can at least reduce the levy of interest.