ITR Filing 2023: Here's What Happens If You Don't File Your Return On Time
If the ITR deadline is missed, apart from the fine, individuals will also have to pay 1% interest per month on the tax amount.
The last date for the filing of tax returns is fast approaching, and it is essential that every individual taxpayer ensure that they file their return in time. There are several consequences that the taxpayer would face if this deadline is missed, and the goal of every person should be to gather all their details and ensure that their return is uploaded and verified.
Here are some of the consequences of not filing the return by the due date:
Belated Return Time
The moment the income tax return is filed after the due date, it is called a belated return.
The important thing is that the individual does not have an indefinite period after the due date to file their tax return because this is allowed only up to a certain date. So, if this final date is missed, then you will not be able to file your return at all. The applicable final date for the return filing process is Dec. 31, 2023, and this means that if you miss the July 31 deadline, ensure that it is filed at least before Dec. 31.
Late Filing Fee
The moment the return is not filed by the original due date, a late-filing fee will be applicable. This late-filing fee was not there earlier but has been introduced from the financial year 2017–18 under a new Section 234F.
The quantum of the late filing fees under Section 234F depends on the total income of the person who is filing the return. If the total income is more than Rs 5 lakh and the return is filed late, then the late-filing fee will be Rs 5,000. If the total income is less than Rs 5 lakh, then the late-filing fee will not be more than Rs 1,000. One significant point is that there is no late-filing fee if you are not supposed to file a return.
So if you are an individual whose income is less than the basic exemption limit but still filing a belated return, then there will not be any late filing fees.
Penal Interest
The situation gets worse if the taxpayer has not filed their return in time and has some tax to pay on the income. If this is the case, then penal interest will have to be paid under Section 234 A. This is at 1% per month of the tax amount, and even a single day above the month will be calculated as a whole month. The delay has to be calculated from the due date of the filing of the return and ends on the day the belated return is filed.
For example, if the due date is July 31 and a person files the return on Oct. 2, even though the delay is two months and two days, the interest will be calculated for three months at 1% per month. This interest is in addition to the other interest calculated for missed advance tax payments or short payments of advance tax.
No Carry Forward Of Losses
A bigger impact for the taxpayer is with respect to some of the benefits that can be taken under the Income Tax Act.
Under normal circumstances, the individual is able to set off losses as per the nature of the income against various heads of income and if there are excess losses, then they can be carried forward to be set off against future income.
For example, if there are losses on sale of shares, then they can be carried forward for eight years. However, if the return is not filed on time, then the losses cannot be carried forward and this benefit will not be available. This can be a big hit in terms of the tax impact so to avoid this the return should be filed in time.
Arnav Pandya is founder Moneyeduschool.
The views expressed here are those of the author, and do not necessarily represent the views of BQ Prime or its editorial team.
