Consequences of Late or Non Filing of the Income Tax Return

Every individual liable to pay tax in India is required to file Income Tax Return before the due date as specified in income tax act 1961.

Due date is different from person to person and is decided by the government of India.

Some people also call it last date of filling income tax return (ITR). But in reality, due date is not the last date.

If someone missed the due date then he or she can still file IT return within a period of 1 year from the end of the financial year. But in such cases, assessee is required to pay late filing fee, interest and penalty for not filling of income tax return in time.

For the purpose of filing ITR, financial year means the year in which you have earned the income. The financial year immediately following the above mentioned year is known as the assessment year.

As per the law, you are required to file Income Tax Return for the income earned in a financial year in the related assessment year.

For instance, income earned during the period starting from 1st April 2019 to 31st march 2020 is known as financial year 2019-2020. Income earned during the year 2019-20 will be assessed to tax in the assessment year relevant to FY 2019-20 i.e. AY 2020-21.

In this article, we will be discussing problems that may arise for Late or Non Filing of the ITR.

Before getting into it, let us first understand income tax due date applicable to an individual in different circumstances.

IT return filing Due date for individual

Income tax return filling due date for an individual is 31st July of the assessment year relevant for the financial year for which return has to be filed.

In case the individual is liable to tax audit then due date will is 30th September instead of 31st July.

These due dates can be extended by CBDT. If its extended then such extended date will be considered as due date of filing for that assessment year.

For financial year 2019-2020, ITR filing due date is 31st July 2020. If the individual is liable for tax audit then 30th September 2020 will be the actual due date.

What if return filling due date is missed

If you missed the due date of filling IT return then you can still file it within 1 year from the end of the relevant financial year. Here are the consequences of late or non filing of the Income Tax Return.

Late filing Fee

From financial year 2017-18 onwards, government has introduced a concept of late filing fee into the income tax act i.e. section 234F.

As per this change, if return is filed beyond due date but before 31st December of the following financial year, then late filing fee of Rs. 1000 has to be paid if total income does not exceed Rs. 500000.

If total income equal to or more than Rs. 500000, then late filing fee of Rs. 5000 will be paid in case it’s filed beyond the due date of filing but on or before 31st December.

In other cases, penalty is Rs. 10,000 (i.e. when return is filed after 1st December but before 31st march).

No carry forward of losses

Business and capital losses cannot be carried forward to subsequent financial years to offset against that year incomes. However, house property losses and un-absorbed depreciation can be carried forward even if IT return is filled after the due date.

Interest on tax amount for late filing

As discussed above, an individual can file income tax return before 31st July of the assessment year without paying any late filing fee.

However, in case tax liability has not been paid before the due date of filling then interest will be levied on the amount of tax that is unpaid.

Interest in this case will be chargeable at the rate of 1% per month or part of the month up to the date of filing ITR.

If assessee has not filed the ITR at all then interest has to be calculated from the due date till the date of completion of assessment order passed by the assessing officer.

Such interest has to be calculated on net tax payable i.e. after deducting TDS, TCS and advance tax paid if any.

If your total unpaid tax liability is more than Rs. 10,000, then you may be liable to pay additional interest under section 234C and 234B for not paying it in advance. Read our article on advance tax to know more.

Delay in getting tax refund

After filing your ITR, central processing unit at Bangalore will process your refund if any available to you. Its only then tax refund will be determined and processed to your bank account. If you delay in filing return, it will result delay in processing refund to your account.

Interest on such refund will not be paid for the period of delay in filing income tax return.

To avoid all these problems, we suggest you to prepare yourself at the beginning of the year. Collect all those documents that are relevant for your IT filling and then find out the tax liability if any and paid it along with interest if applicable.

is a fellow member of the Institute of Chartered Accountants of India. He lives in Bhubaneswar, India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.