The last date to file an Income Tax Return (ITR) without any penalty was July 31. But if you missed the deadline, you can file a belated return until December 31, 2023. 

According to the Income Tax Act, it is mandatory to file your  Income Tax Return (ITR) on time. Not filing it can have serious consequences, including penalties, interest charges, and even imprisonment. 

Read on to understand the consequences of not filing your income tax returns.

Late Filing Penalty

If you miss the due date for filing your ITR, you will be charged a fine for late filing. The penalty is Rs 5,000 for individuals with a total income exceeding Rs 5 lakh, and for people with a total income less than that, the penalty is Rs 1000. 

The longer you take to file your ITR, the higher your penalty will be. If you file your income tax return after December 31, 2023, you will have to pay a penalty of Rs 10,000.

Interest Charges

According to Section 234A of the Income Tax Act, interest is charged on any outstanding tax dues at a rate of 1% per month or part thereof. This means that for every month that your taxes are unpaid, you will accrue an additional 1% in interest charges. The interest is calculated after deducting any advance tax you paid. This interest is calculated from the date you file your return for the financial year until the due date.

Let’s look at an example to understand it better:

Say you owe Rs 3 lakh in taxes for the financial year 2022-2023 and pay it in January 2024. This is six months after the deadline. In this instance, you will be charged Rs 18,000 as interest (3 lakhs × 6%). This interest amount will be added to your tax liability. So, the longer you delay paying your taxes, the greater your tax liability will be.

Missing Out On Deductions and Exemptions

Various sections of the Income Tax Act offer exemptions and deductions to reduce your tax liability. For instance, Section 80D offers deductions up to Rs. 1 lakh for health insurance plans, and Section 80G offers a deduction on donations to certain charities. When the ITR is not filed on time, you could risk losing all these deductions.

Other Consequences

Here are some other consequences that can affect your financial health:

• Loan eligibility: When you apply for a loan, lenders often check your tax returns. If you miss filing your income tax returns, you might find it hard to get loans at reasonable interest from banks and other NBFCs.
• Visa application: Various countries ask for your tax returns when issuing a visa. So, if you don’t file returns on time, it can become difficult to get a visa.
• Imprisonment: For possible tax evasion above Rs.25 lakhs, the consequence is a penalty for not filing an ITR and imprisonment of at least 6 months, which can extend to 7 years.

How to Avoid The Consequences of Missing ITR Filing

• File your ITR on time or within the specified grace period.
• Calculate your tax liability accurately and pay the tax due on time.
• Keep your financial records organized and readily available for filing your ITR.
• Get professional tax advice if you need assistance in filing your ITR or calculating your tax liability.

Income Tax Return Forms

Depending on the type of income, the category you fall under, and the income you make, the relevant form must be chosen. Find the Eligibility to File ITR Form

 

Forms	ITR-1	ITR-2	ITR-3	ITR-4	ITR-5	ITR-6	ITR-7
Eligibility	Individual (residents), HUF	Individual, HUF	Individual, HUF, or partner in a firm	Individual, Firm, HUF	Partnership Firm, or LLP	Company	Trust
Salary	✅	✅	✅	✅	❌	❌	❌
House property	✅ (One)	✅	✅	✅ (One)	✅	✅	✅
Capital Gain	❌	✅	✅	❌	✅	✅	✅
Business income	❌	❌	✅	Presumptive	✅	✅	✅
Other sources	✅	✅	✅	✅	✅	✅	✅
Exempt income	✅ (Agricultural income less than Rs.5000)	✅	✅	✅ (Agricultural income less than Rs.5000)	✅	✅	✅
Lottery Income	❌	✅	✅	❌	✅	✅	✅
Foreign Income/ Asset	❌	✅	✅	❌	✅	✅	✅
Carry Forward Loss	❌	✅	✅	❌	✅	✅	✅

By following these simple steps, you can ensure that you comply with your tax obligations and avoid the potential consequences of not filing your ITR.