Income Tax Return deadline ends today: Consequences for late filers decoded

One can also file a belated return, but there are several consequences. Firstly, a late filing fee ranging from 1k-5k may be imposed under Section 234F of the Income Tax Act

Today, July 31, is the last day for filing your Income Tax Returns (ITR) for the financial year 2023-24. Failing to meet this deadline can have serious repercussions.

Ritika Nayyar, Partner, Singhania & Co explains the consequence:

Late Filing Fee: If you miss this deadline, you may still file the ITR by 31st December, however you shall be required to pay a penalty of Rs 5,000/-. There is a relief for small taxpayers whose total income does not exceed Rs 5,00,000/-, for them, this penalty shall be a maximum of Rs 1,000/. In short,  youu will be charged a penalty of Rs 5,000 (reduced to Rs. 1,000 for those with a taxable income below Rs 5 lakh).

Interest: Interest will be charged on the unpaid tax amount at a rate of 1% per month or part thereof from the due date (August 1st) until the date of payment.  For example, if you file your ITR on 30th November, the interest calculation on tax will start from 1st August to 30th November on the amount of tax due, till the date of filing of ITR.

Taxpayers may lose certain benefits of filing a return within due date. This includes the ability to carry forward losses for future set-off against income, which can be particularly detrimental for businesses or individuals with capital losses.

"In case of repeated non-compliance, severe penalties could be imposed or even prosecution may be initiated. For instance, if a salaried taxpayer having a total income of Rs 10 lakh fails to file his return by the due date and owe an additional amount of Rs 50000 in taxes, he would face a late filing fee and additional interest on the unpaid taxes, adding to his financial burden. Therefore, it is advisable to file income tax return on time to avoid these penalties and any inconvenience that may cause to a taxpayer," said Vishal Gehrana, Principal Associate, Karanjawala & Co. and Advocate on Record, Supreme Court.

Loss of Carry Forward Benefits: If you have incurred losses (from investments, business, etc.), you cannot carry forward these losses to offset future income unless you file your return on time.

Loan Rejection: Many financial institutions consider your ITR as proof of income. Not filing it can hinder your chances of getting loans.

Severe Penalties: In case of significant tax evasion, the Income Tax Department can initiate legal proceedings, including imprisonment and hefty fines.

Difficulty in Claiming Refunds: If you have overpaid taxes, you won't receive a refund without filing a return.

Notice from Tax Department: Delayed filing can lead to notices from the tax department, causing unnecessary stress and hassle.