ITRLegal AdviceTaxation

 What Happens If I Don’t File My ITR?

All individuals who generate a taxable income in India must pay their dues, and file their income tax returns on time to stay compliant. The income tax returns help the government maintain records of taxpayers and prevent tax evasion and fraud. 

Most people are aware that if they earn over a prescribed amount in a year, they have to pay the appropriate tax on that income to the government. However, during the tax season, most people get confused regarding how to file their income tax returns. These returns, better known as ITR, are as integral to tax compliance as paying your tax liability. Here’s a look at everything you need to know about filing your ITRs on time.

What Is an Income Tax Return?

An income tax return is essentially a document that helps inform the government about your income. If you don’t inform the government, you will have to face penalties and problems later on as it can become tax evasion. Hence, all individuals who fall under the taxable bracket must regularly file income tax returns. The Income Tax Department has reminded taxpayers of the need to file their ITRs on time on several occasions. If an individual forgets to file their ITRs, it can invite a penalty of up to ₹10,000. Besides this, a delay or pause in the filing of income tax returns also makes you liable to pay interest on the taxable amount you owe the government. 

What Are the Current Income Tax Rates for Taxpayers?

Here’s a quick look at the current income tax slabs for taxpayers.

Taxable Income Range (in ₹) Tax Before 2020 (Existing) Tax Post Budget 2020
Up to 2.5 lakhs Exempted Exempted
Between 2.5 and 5 lakhs 5% 5%
Between 5 and 7.5 lakhs 20% 10%
Between 7.5 and 10 lakhs 20% 15%
Between 10 and 12.5 lakhs 30% 20%
Between 12.5 and 15 lakhs 30% 30%
Above 15 lakhs 30% 30%


Is it Compulsory to File Income Tax Returns?

Yes, all taxpayers must file their income tax returns on time to remain compliant. Failure to do so will attract penalties and can hamper your chances of getting a loan, a visa for travel purposes, or property registration. As per the Income Tax Act, the following entities must mandatorily file ITRs in India:

  1. People whose gross total income exceeds ₹2.5 lakhs. 
  2. Senior citizens whose gross total income exceeds ₹3 lakhs. 
  3. Super senior citizens whose gross total income exceeds ₹5 lakhs.
  4. Companies or firms must file ITRs irrespective of their returns.
  5. Individuals who want to demand an income tax refund or carry forward a loss under a head of income.
  6. Resident individuals who have an asset or financial interest in an entity located outside India. 
  7. Residents and signifying authorities in a foreign account. 
  8. Individuals who acquire income from assets or property that are under a political party, research association, news agency, educational institution, infrastructure debt fund, a hospital, or any authority or trust.
  9. International companies doing business in India.
  10. Non-resident Indians have made over ₹2.5 lakh in India.

Why Should People File Their Income Tax Returns?

  1. Makes it easier to get loans from financial institutions and banks.
  2. Necessary to stay compliant and on the right side of the law.
  3. Allows individuals to claim tax refunds, as and when required. 
  4. Serves as both an income and address proof
  5. Enables quick visa processing and approval
  6. Facilitates the carry forward of losses
  7. Helps individuals and companies avoid penalties and paying interest on their tax liability

What Happens If Individuals Fail to File Their ITRs?

Here are certain things that will happen if you do not file your income tax returns on time:


A penalty is a three-tier fee system that has been introduced for not filing income tax returns within the due date. If a return is filed beyond the due date, then fees payable will be ₹5,000, otherwise, it will be ₹10,000. However, for taxpayers whose annual income falls under ₹5,00,000, the fees payable would be restricted to ₹1,000.

Reduced Time for Updating Your Income Tax Returns

If you make a mistake while filing an ITR, there are certain rules you need to follow to make the required changes. Earlier, taxpayers had a 2-year window to review and resubmit erroneous ITRs. However, the government recently reduced this window to one year from the end of the financial year. Hence, the sooner you file your returns, the longer is your window for revising your returns and rectifying errors, if any.

Interest on the Tax Amount

When an individual or company fails to pay their income tax return on time, they will have to pay an interest of 1% per month until they file their ITRs. The stated interest is payable on the tax payable after decreasing the tax deducted at source, tax collected at source, advance tax, and other tax credits available under the law. TDS is deducted by the buyer or payer while the TCS is collected by the receiver/seller.

No Carry Forward of Losses

If an ITR is not filed within the due date, the taxpayer will not be allowed to carry forward any loss under the head of ‘profits and gains of business or profession’ or ‘capital gains. However, unabsorbed reduction and loss under the head ‘income from house property shall be entitled to be carried forward.

Delay in the Method of Return of Income

Once the return is signed and filed, the same is processed and double-checked by the Income Tax department’s central processing centre in Bengaluru. It is only after this verification that the tax liability or refund of the taxpayer is defined. Thus, in case the taxpayer is claiming a refund, the delayed filing of the income tax return will result in a delayed receipt of the tax refund. 

How We Can Help

As you can see, all individuals and companies need to make sure they file their income tax returns on time to avoid such inconveniences. However, filing your returns can be a complicated and lengthy procedure due to all the paperwork involved. Additionally, some of the forms can be challenging to complete as they are highly technical and require a lot of information. Hence, most companies and individuals rely on service providers like Vakilsearch to file their returns on time. Our legal experts will collect the information required and file your returns with the IT department on your behalf. Say goodbye to complicated tax seasons with Vakilsearch by your side!  


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