Not filing your Income Tax Return (ITR) on time incurs late filing charges under Section 234F of the Income Tax Act. You may incur a fine of ₹5,000 if your total income is over ₹5 lakh. If your income is under ₹5 lakh, the late fee is less at ₹1,000. While that may not seem like a lot, the penalty is more if there are other tax charges or interest as well.
Interest and forfeiture of refund opportunity
Interest will be charged for late filing under Sections 234A, 234B, and 234C. You will be charged interest on the amount due if you are required to pay tax and have not filed the return in time, which will enhance the payable amount. You will be subject to delay or lose the right to claim the refund of tax if you are entitled to a refund of tax but do not file in time.
Loss of carry forward of losses
A further important benefit of timely filing your ITR is the ability to carry forward certain losses — like business losses or capital losses — to be offset against future gains. This benefit, however, stands to be lost if the return is not filed within the prescribed due date. This could lead to a higher tax outgo in subsequent years.
Legal consequences and scrutiny
Continuous non-filing or deliberate evasion may attract prosecution under the Income Tax Act. In exceptional cases, individuals may be punished with rigorous imprisonment from three months to two years with a fine for not filing returns despite receiving reminders. If tax evasion exceeds ₹25 lakh, imprisonment can extend to seven years.
Delayed loan or visa sanctions
Early submission of ITR is normally required for financial activities like availing of loans, procuring credit cards, or visas. Lenders and foreign nations use ITR records as proof of income and reliability. Not submitting returns may delay or even deny you such opportunities.
Submit your ITR timely even if you have no tax liability to pay
Even if you earn less than the taxable threshold, it is worthwhile to file an ITR. It is a document of financial integrity and guarantees compliance. The price of neglecting to do it in a timely manner — including penalties, interest, legal risks, and missed benefits — is too much compared to the effort involved in timely compliance.
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