ITR is a summary document which contains information about a person’s income for a financial year. ITR did not file a penalty. Every year people have to pay their taxes and submit their returns to income tax department. different income slabs are subject to different tax rates as per income tax department. Government also reminds people to file their income tax returns regularly. There may be fines and penalties if you don’t pay your dues or file ITR. We can get What is the penalty for not filing ITR?
So, to avoid all this, people should file their taxes on time every year. Here’s all the information you need on filing your returns and ITR not filed penalty.
A Brief Overview of ITR and Its Importance
Income, deductions and tax liability for a financial year is shown in the income tax return of an individual. As per Income Tax Act 1961, it is mandatory for individuals and companies to file it annually if they meet the specified income criteria. Giving the government a record of an individual’s income and tax paid is the main purpose of ITR. It also provides evidence of income for loans, visas and other financial services and helps in tax collection of government. ITR not submitted if payment not made on time
Income Tax Return
Every person who gets income in a financial year has to file income tax return once a year. Based on their annual income, people are categorized into different income tax slabs. Income tax department periodically reminds people to file these as they may forget to do so. But people will be charged with fines and penalties if they don’t file their taxes on time.
These returns have a specific format and people have to disclose their income earned in a financial year. By the end of the financial year, people have to pay the income tax department the taxes calculated on this income. There is a minimum slab and people who exceed it have to file income tax returns. Even if people can file their income tax returns after the deadline. People can file belated returns at a later time as per Section 139(4) of Income Tax Act.
Consequences of Not Filing ITR
Failing to file ITR has two serious consequences – financial and legal. Here are the penalties for not filing ITR:
- Legal Penalties: Not filing ITR can lead to criminal charges under Income Tax Act or a notice from Income Tax Department.
- Financial Penalties: If you don’t file ITR on time, you will be charged late fees, interest and penalties.
- Loan Issues: ITR is an important document for lenders so not filing it will attract penalties.
- Refund Delay: You may not get your refund on time or lose your right to refund if you don’t file ITR.
Penalties for Not Filing ITR
Each and every Indian taxpayer is required to file ITR and pay the penalty imposed for not doing so. It is law and mandatory document for providing financial services such as loans and visas. Non filing of ITR can lead to disastrous results including monetary and legal penalties. This article deals with ITR not filed penalty and interest on unpaid tax amount also and penalties for late and non-filing of ITRs.
- Penalty for Late Filing of ITR: A taxpayer can be penalized maximum amount of Rs. 10,000 in case he does not file ITR by due date. The amount of penalty is determined by the period of delay as well as total income of the taxpayer. For example the penalty will be Rs. 1,000 if his total income is less than Rs. 5 lakhs and in case the ITR is filed after 31st Dec of the assessment year then, it will be Rs. 10,000.
- Penalty for not filing ITR: A taxpayer can be punished with a penalty of up to Rs. 10,000 in case he fails to file ITR. This penalty will, however, be aggregated to the tax liability. For instance, if the total income is Rs. 5 lakhs and tax liability is Rs. 20,000 then, total penalty will be Rs. 30,000 (Rs. 20,000 tax liability + Rs. 10,000 penalty). Interest on Unpaid Tax Amount: 1 percent interest per month will be charged on the outstanding tax liability for a taxpayer who defaults on the payment of tax dues. This interest will be calculated from the moment of real payment and the ITR filing date. If a taxpayer doesn’t pay taxes and does not file the tax return for an extended period of time, the interest charge may grow.
What Happens If you Fail to File ITR?
Let us now analyze the consequences of not filing your income tax returns.
Penalty
It depends on a three-tier penalty structure for the failure of filing income tax returns by due date.
Penalty for filing the income tax return after the due date and before 31st December is a fine of ₹5000 along with your regular tax liability in as much as this is a penalty for ITR not filed.
All others stand to visit this penalty of ₹10000. If the income tax return is filed on or after January 1st, penalty is ₹1000, if income tax return less than 5 lakhs and also ITR not filed penalty.
Revised Income Tax Return
Revised ITR can be filed for the correction of a mistake done in original ITR. Earlier, there were 2 years given to taxpayers for revised ITR from the time of the error to the government now reduced it to 1 year. ITR can thus be revised for more time without the ITR not filed penalty, the sooner the taxes get filed.
Reduced Time for Revising Your Return
It actually has a time limit within which the amendment of a return filed ITR has to be executed. The reduced period of time may prove to be quite a pain in the neck if ITR has been filed and then it is discovered later that something was wrongly done or omitted. ITR can be revised within a specific time frame, and unless that is adhered to, a penalty will be levied. Taxpayers must therefore carefully and timely check their filed returns for errors or omissions to meet the timing for the revision. Not doing so on time would create complications and incur penalties. Be in the know for such a window to revise such errors in your ITR file.
Payment of Interest
Taxes must be paid on time to availing the avoiding interest. If assessed tax is not discharged timely, interest would be charged on the unpaid downside. It is computed from the first filing deadline up to actual payment date. Pay on time for taxes and know the interest rates to avoid further hassle regarding this. Tax compliance should therefore mean you knew and paid for the interests timely.
Carry Forward of Losses is Not Permitted
Failure to file return of income within due time shall allow carrying forward losses. Capital losses or business losses suffered in a particular year would be carried forward and set off out of future income. Without filing ITR by the due date as penalty, however, it forfeits the carry-forward losses for the purpose of set off in subsequent years. Taxpayers must know and file on time to carry forward losses.
Bar on the Carry Forward of Losses
You will not carry forward any losses due to “capital gains” or “profits and gains of business or profession” unless the returns are filed within that prescribed time. Individuals who are under-invoiced can set their unabsorbed depreciation against income from a house property.
Filing income tax returns is the major hurdle that meets all the problems. Although it does not affect directly tax obligations, it bears all these implications:
- Not filing one’s ITR means that one does not apply for any penalty; this means that one stands a problem regarding getting credit or funding as the banks tend to look at their tax returns for the last three years.
- Late filing: After filing, as is the case with most cases, the authorities of income tax scrutinize the returns of early filers, which can cause havoc if you haven’t kept evidence.
From this, it is clear that penalty for not filing an ITR can bring further complication to an individual. Hence, all taxpayers need to file returns as soon as possible to avoid such complications and further delays. For all your queries about income tax return filing, please do reach out to Vakilsearch. Our highly efficient legal experts are always ready to assist you with your drafting and filing so that you will not miss out on dues or due dates; we will also send reminders before due dates!
Importance of Timely Filing of ITR
Filing ITR on time saves oneself from hefty penalties and legal tangles. The ITR penalties for late filing can be avoided by individuals filing before July 31 and corporates filing before September 30. Filing such IT returns also helps in avoiding interest on unpaid tax amounts. It allows the taxpayer to avail financial services like loans and visas upon submitting ITR in time.
What if ITR is not filed for the Previous Financial Years?
Apart from penalties and legal actions, there are other things that can cause a lot of inconveniences to individuals due to failure to file ITR for preceding years. Hence, every taxpayer should be learned about filing ITR every year as this practically indicates tax compliance. In such case of non-filing, it is advisable to be swift in regularizing the situation and paying taxes.
Steps to Place Condonation of Delay Request to File Previous Years Return
There are many taxpayers who did not file their returns for previous years and therefore might want to consider seeking condonation of delay since it is the request to the authorities for enabling to file their previous due returns with the explanation as to why it was not filed in time. They should also comply with the guidelines for requesting condonation with attached documentation.
Filing Return Through Paper Mode (Offline) for Previous FY After the Due Date
Taxpayers may file returns offline (on paper) if they have missed the last date of filing ITR for previous years. This manual filing requires submission of forms to the tax department. But there are some rules and regulations associated with this. Taxpayers also should adhere to the offline filing process after the due date to be safe from compliance issues.
How to Avoid Penalties
Income tax return filing must be done timely to avoid penalties and legal penalties. This article will discuss how to avoid fines for not filing an ITR on time, correcting the ITR, and more. Hence, avoid penalty through not filing an ITR.
Taxpayers can follow these tips to avoid penalties:
- Keep track of ITR due date and file ITR on time.
- Use the right ITR form for your income and source of income.
- Declare all income – salary, rent, interest, capital gains etc.
- Ensure all details in ITR are correct and complete. Pay tax on time to avoid interest.
How to Rectify Mistakes in ITR ?
You can file a revised ITR to correct any mistakes you find in your original ITR after you have submitted it. Before the end of the assessment year (March 31) or before the income tax department completes the assessment, whichever is earlier, you can file a revised ITR. In the revised ITR form, you can correct errors like incorrect income, deductions or tax payment.
- Common Mistakes to be Avoided
Filing income tax returns (ITRs) can be intimidating especially for first time filers. ITR errors can lead to penalties and legal consequences. This post will cover some common ITR errors that people make while filing ITRs like filing wrong form, calculating tax liability wrongly and not disclosing all income sources.
- Filing wrong ITR Form
Filing wrong ITR form is one of the most common mistakes made by taxpayers while filing ITR. Different taxpayer types can use different ITR forms based on their income and sources of income. To avoid any discrepancies or ITR rejection it is very important to choose the right ITR form. Taxpayers should carefully follow the instructions to choose the right ITR form for their income and source of income.
- Calculated Tax Liability
Incorrect calculation of tax liability is another mistake that filers need to correct while filing ITR. Taxpayers should carefully calculate their income and deductions while calculating their tax due. Any incorrect calculation can lead to penalties and legal consequences. Taxpayers can calculate their tax liability accurately with ITR not filed penalty by using online tax calculators or consulting an expert.
- Not disclosing all income sources
Taxpayers are required to report all their income including capital gains, interest, rent, salary and other sources. Penalties and legal consequences can follow if income is not reported. So it is very important to fill ITR form correctly and disclose all income sources.
What is the Last Date to file an ITR?
ITR filing for FY 2022-23 is July 31, 2023. But there are some exclusions. Foreign taxpayers have till December 31, 2023 to file their ITR.
Conclusion
Filing income tax returns (ITR) is not only mandatory under law, but an extremely important part of financial responsibility. Additional advantages include the prevention of penalties and interest. It also helps to comply with tax laws and to achieve financial goals like loans, visas, and so on. Financial losses, legal hazards, and the loss of such perks as loss carryovers can result from missing deadlines or not filing at all.
As a taxpayer, one should keep record of all the sources of income, choose the right ITR form, remain updated on the latest deadlines, and consult someone for professional advice if and when needed to avoid such consequences. Timely filing an ITR rightly streamlines tax compliance, creates financial confidence, and builds links to the tax authorities and banks. Building political obligation toward the economy of the country, paying taxes regularly shows.
Taxpayers can ensure a hassle-free experience at the start of their treasury obligations by knowing the penalties involved and proactively filing on time. Today, a breadwinner should remember that compliance can be beneficial to tomorrow’s safe financial future.
