Income tax is a tax imposed by the Indian Government on income of a person. Filing of income tax is responsibility of every citizen. Filing an ITR is a way to let the government know about your income. If you do not inform the government, you have to face penalties & problems. If you are in the taxable position, then you need to file income tax returns.
Individuals with income exceed more than the basic exemption limit are needed to file Income Tax return within the due date. If the person fails or misses the due date then there are the few provisions of penalty under the Income Tax Act, 1961. The income tax officer may contact the person through a notice to furnish reasons for not filing the return within due date.
If the income tax return is not filed before the due date, both interest & penalty would be levied for the late filing of income tax return. Not filing the return within due date may lead to the penalty of INR 10,000.
What are the Consequences of not Filing by the Due Date?
Apart from the penalty levied by the Income Tax Department, there are other consequences that you need to face: –
Not able to Set Off Losses
Losses obtained are not allowed to be carried forward to subsequent years other than house property loss. If the income tax return has not been filed, you cannot set off these losses against future gains.
Interest on the Delay of Filing Return
If you do not fill the ITR then apart from the penalty for late filing, interest under section 234A at 1% per month or part thereof will be charged till the date of payment of taxes. It is essential to note that ITR cannot be filed unless taxes are paid. The interest calculation will start from the date falling immediately after the due date. Thus, the more you wait the more you pay.
In case you are eligible to receive a refund from the government for excess taxes paid, you need to file the returns before due date to receive your refund at the earliest. You need to file your Income Tax Return to claim the refund of TDS at earliest.
Penalty and Notice
According to Section 234F, if you have taxable income and do not file, the return of Income you may end up paying penalty for concealment of Income. Besides penalties & disadvantages that when your IT return is not filed by the due date, the income tax department may send you a notice of inquiry to ask you to file the return as per the date mentioned in the notice.
Application for Appling Loans will Become a Hassle
When you are applying for any kind of loan like personal, education loan etc. then there is a requirement to declare your income. Before sanctioning any loan banks usually gauge an individual’s financial capacities and ITR can be the best for you to show your income. So, it is of sheer importance that one stays in compliance with the guidelines of the IT Department.
So, it is advisable for everyone who are eligible to pay the tax to file an income tax return on time so that you can avoid certain consequences including levy of a mandatory fee.