Mumbai – : Filing your income tax return is an essential responsibility for every citizen. If your income falls within the taxable bracket, it becomes crucial for you to file your income tax return. Failure to do so can lead to a host of problems. In this article, we will explore the consequences of not filing your income tax return on time and provide you with valuable insights to avoid any unnecessary trouble.
Late Fee for Late Filing
One of the immediate implications of not filing your income tax return on time is the imposition of a late filing fee. Under section 234F, a late filing fee of Rs 5000 may be levied. However, if your total income is less than Rs 5 lakh, the late fee is limited to Rs 1,000. It’s important to note that if your income is not taxable, you will not incur any penalty for the late filing of your income tax return.
Interest on Tax Amount
In addition to the late filing fee, you will be liable to pay interest on the outstanding tax amount. As per section 234A, a 1% interest per month or part of a month will be charged. This interest will be calculated from the due date of filing your return for the relevant financial year until the actual date of filing. To avoid accruing additional interest, it is crucial to file your income tax return promptly.
Loss on Benefits
If you have incurred losses in the stock market, mutual funds, real estate, or any other business venture, you have the opportunity to carry forward those losses and offset them against future profits. This provision significantly reduces your tax liability. However, if you fail to declare these losses in your income tax return by the due date, you will lose the ability to utilize them as an offset against future gains. It’s important to note that losses related to a house property can still be carried forward.
Inability to Modify ITR
When the original return is filed within the due date, the taxpayer has the freedom to revise their income tax return multiple times. However, if the initial return is filed late, the benefit of revising the return is not available. Therefore, when submitting a belated income tax return, it is crucial to exercise utmost care and ensure the accuracy of all details. Errors in a belated return cannot be rectified, and it is important to avoid any mistakes.
One of the most significant consequences of not filing your income tax return on time is that the Income Tax authorities may perceive it as an attempt to evade taxes. Consequently, they possess the power to levy penalties under section 270A for under-reporting income. The penalty amount is equal to 50% of the tax evaded due to the non-filing of returns. Furthermore, individuals can face rigorous imprisonment ranging from three months to two years, along with fines, depending on the amount of tax evaded.
Ensuring that you file your income tax return on time is of utmost importance. By doing so, you avoid unnecessary penalties, interest charges, and potential legal consequences. It is advisable to keep track of the due dates and seek professional assistance if needed to ensure accurate and timely filing of your income tax return.
Remember, timely filing of your income tax return not only fulfills your legal obligations but also helps in maintaining financial discipline and contributing to the nation’s development.