What will happen if you don’t file your Income Tax Returns?

Last Updated at: January 07, 2020
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What will happen if you don't file your Income Tax Returns

Income tax return is the summerized document of a person’s income in a financial year. The tax has to be paid to the income tax department at the month end of financial year. There are different varieties slabs of taxes for different income slabs. The income tax department sends reminders to file the income tax returns. When they file the income tax returns on the later date, then they have to face the consequences attached to it which is called as Belated returns.

Income tax return has to be filed by everyone earning person once in a fiscal year. There will be various tax slabs based on the yearly salary. The income tax department will send reminders to everyone to file the income tax returns. If you fail to do so before the deadline, you will have to face consequences such as penalty.

Income Tax Return is a prescribed format through which a person has to disclose the income that is earned by a person in a financial year. The taxes on this income have to be paid to the Income Tax Department by the end of the financial year. There are different slabs of taxes for people from different income slabs. There also exists a minimum slab, above which it is necessary to file income tax returns. The Income Tax Department often keeps sending reminders to persons to file their income tax returns. Although people can file their income tax returns at a later date, there are certain consequences attached to the same. This return which is filed on a later date is known as a Belated Return. Such a return is permitted to be filed under Section 139(4) of the Income Tax Act.

File your ITR before due date

If you’re just looking around for related information on startups, government registrations, tax or legal documentation, check out the list of services we provide to make your interaction with government as smooth as is possible by doing all the legal documentation for you. We will also give you absolute clarity on the process to set realistic expectations.

 

This article seeks to analyse the consequences of not filing income tax returns. The following are the circumstances that will arise if you do not file your income tax returns-

Penalty

There exists a three-tier fee system in place for persons who do not file their income tax returns within the stipulated date for doing so. If the income tax return is filed after the due date but before the 31st of December, a fine of Rs. 5000 is payable in addition to the taxes that such a person is required to pay. In other cases, i.e. when the income tax return is filed on or after 1st January, the fine that is levied will be Rs. 10000. However, in cases where the income tax return of taxpayers does not exceed Rs. 5 lakhs, the fees payable is Rs. 1000.

Reduced Time Frame in which the Revised Income Tax Return can be Filled

If an error is committed while filling the Income Tax Return, one can file a revised Income Tax Return. Earlier, taxpayers had the luxury of filling a revised income tax return within a period of two years, however now that time period has been reduced to a year. Thus, the earlier the income tax returns are filled, more the time one would have to revise the returns if required.

Levy of Interest on the Tax Amount

In situations in which Income tax returns are not filed till the due date, interest is levied in the form of a penalty at the rate of 1% per month including the month in which the payment is finally made. This tax is payable after deducting the tax deducted at source, tax collected at source, advance tax and other tax credits that are available under the provisions of the Income Tax Act.

Bar on the Carry Forward of Losses

If income tax returns are not filed before the due date then the person filing the income tax return after the due date will not be permitted to carry forward any losses which are normally allowed under the head of “profits and gains of business or profession” or “capital gains”. However, unabsorbed depreciation is permitted to be carried forward under the head of “income from house property”

There are a host of associated problems which one might face because of a delay in filing income tax returns. These problems while not directly linked to the Income Tax Department, would still cause problems to the taxpayer. Some of them are mentioned below-

  • Banks consider the Income Tax Returns of the past three years when you have to apply for a loan. Thus, during the time of loan application, issues could arise because of filing your Income Tax Returns late.
  • The Income Tax Authorities tend to scrutinise those accounts more which are submitted late as opposed to the ones which are submitted on time. This could lead to a situation where you have to submit proofs and an income tax return can come under scrutiny till 5 years later, a time at which you might not be in possession of the requisite proofs.

In light of the various disadvantages associated with a delayed filing of income tax returns, it is always advisable for taxpayers to file their returns on time.

The consequences of not filing the income tax returns are paying penalty, reduces the time frame to one year to file a revised income tax returns and interest is levied in the penalty form at 1% per month should be paid till the final payment is done. The late income tax returns also affects whiling applying a loan in the bank. As there are lot of disadvantages in filing late, it is advised to file tax returns on time for the taxpayers.

When can the taxpayer claim refund from electronic cash ledger?

If the taxpayer has paid excess amount by mistake, they can request for refund from the electronic cash ledger.Understand the procedure for GST registration and GST returns here.

How do banks assess the working capital requirements of borrowers?

Methods such as cash flow mismatch are used by banks to assess the capital requirements that the borrowers seek from banks.More on Income Tax Return Filing.

What does the Aadhaar number have to do with filing of tax returns?

Aadhar card is mandatory for tax payers in India. Non-resident Indians, people aged more than 80 years are exempt from providing Aadhar card when applying for PAN card. Learn more about Aadhar Certification.

What is the purpose of ISO standards?

ISO international standards checks whether the services and products remain reliable, good quality and safe. There are certain tools that helps in increasing productivity. More info on ISO Registration in india.

What is the benefit of ngo?

An NGO has a major role in resolving the issues of the underprivileged by using financial assistance received from the Government or foreign bodies.More about NGO Registration.

What will happen if you don’t file your Income Tax Returns?

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Income tax return is the summerized document of a person’s income in a financial year. The tax has to be paid to the income tax department at the month end of financial year. There are different varieties slabs of taxes for different income slabs. The income tax department sends reminders to file the income tax returns. When they file the income tax returns on the later date, then they have to face the consequences attached to it which is called as Belated returns.

Income tax return has to be filed by everyone earning person once in a fiscal year. There will be various tax slabs based on the yearly salary. The income tax department will send reminders to everyone to file the income tax returns. If you fail to do so before the deadline, you will have to face consequences such as penalty.

Income Tax Return is a prescribed format through which a person has to disclose the income that is earned by a person in a financial year. The taxes on this income have to be paid to the Income Tax Department by the end of the financial year. There are different slabs of taxes for people from different income slabs. There also exists a minimum slab, above which it is necessary to file income tax returns. The Income Tax Department often keeps sending reminders to persons to file their income tax returns. Although people can file their income tax returns at a later date, there are certain consequences attached to the same. This return which is filed on a later date is known as a Belated Return. Such a return is permitted to be filed under Section 139(4) of the Income Tax Act.

File your ITR before due date

If you’re just looking around for related information on startups, government registrations, tax or legal documentation, check out the list of services we provide to make your interaction with government as smooth as is possible by doing all the legal documentation for you. We will also give you absolute clarity on the process to set realistic expectations.

 

This article seeks to analyse the consequences of not filing income tax returns. The following are the circumstances that will arise if you do not file your income tax returns-

Penalty

There exists a three-tier fee system in place for persons who do not file their income tax returns within the stipulated date for doing so. If the income tax return is filed after the due date but before the 31st of December, a fine of Rs. 5000 is payable in addition to the taxes that such a person is required to pay. In other cases, i.e. when the income tax return is filed on or after 1st January, the fine that is levied will be Rs. 10000. However, in cases where the income tax return of taxpayers does not exceed Rs. 5 lakhs, the fees payable is Rs. 1000.

Reduced Time Frame in which the Revised Income Tax Return can be Filled

If an error is committed while filling the Income Tax Return, one can file a revised Income Tax Return. Earlier, taxpayers had the luxury of filling a revised income tax return within a period of two years, however now that time period has been reduced to a year. Thus, the earlier the income tax returns are filled, more the time one would have to revise the returns if required.

Levy of Interest on the Tax Amount

In situations in which Income tax returns are not filed till the due date, interest is levied in the form of a penalty at the rate of 1% per month including the month in which the payment is finally made. This tax is payable after deducting the tax deducted at source, tax collected at source, advance tax and other tax credits that are available under the provisions of the Income Tax Act.

Bar on the Carry Forward of Losses

If income tax returns are not filed before the due date then the person filing the income tax return after the due date will not be permitted to carry forward any losses which are normally allowed under the head of “profits and gains of business or profession” or “capital gains”. However, unabsorbed depreciation is permitted to be carried forward under the head of “income from house property”

There are a host of associated problems which one might face because of a delay in filing income tax returns. These problems while not directly linked to the Income Tax Department, would still cause problems to the taxpayer. Some of them are mentioned below-

  • Banks consider the Income Tax Returns of the past three years when you have to apply for a loan. Thus, during the time of loan application, issues could arise because of filing your Income Tax Returns late.
  • The Income Tax Authorities tend to scrutinise those accounts more which are submitted late as opposed to the ones which are submitted on time. This could lead to a situation where you have to submit proofs and an income tax return can come under scrutiny till 5 years later, a time at which you might not be in possession of the requisite proofs.

In light of the various disadvantages associated with a delayed filing of income tax returns, it is always advisable for taxpayers to file their returns on time.

The consequences of not filing the income tax returns are paying penalty, reduces the time frame to one year to file a revised income tax returns and interest is levied in the penalty form at 1% per month should be paid till the final payment is done. The late income tax returns also affects whiling applying a loan in the bank. As there are lot of disadvantages in filing late, it is advised to file tax returns on time for the taxpayers.

When can the taxpayer claim refund from electronic cash ledger?

If the taxpayer has paid excess amount by mistake, they can request for refund from the electronic cash ledger.Understand the procedure for GST registration and GST returns here.

How do banks assess the working capital requirements of borrowers?

Methods such as cash flow mismatch are used by banks to assess the capital requirements that the borrowers seek from banks.More on Income Tax Return Filing.

What does the Aadhaar number have to do with filing of tax returns?

Aadhar card is mandatory for tax payers in India. Non-resident Indians, people aged more than 80 years are exempt from providing Aadhar card when applying for PAN card. Learn more about Aadhar Certification.

What is the purpose of ISO standards?

ISO international standards checks whether the services and products remain reliable, good quality and safe. There are certain tools that helps in increasing productivity. More info on ISO Registration in india.

What is the benefit of ngo?

An NGO has a major role in resolving the issues of the underprivileged by using financial assistance received from the Government or foreign bodies.More about NGO Registration.

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