Late Filing of Income Tax Returns: Penalties and Consequences

As a responsible citizen of the country, you must file Income Tax Returns (ITR) on time. After the end of the financial year, you get 4 months, starting from April 1 to July 31, so you can compute your income details and file your ITR.

 

Not filing your ITR before the due date can lead to various consequences. You may need to pay penalties for late filing of income tax returns and face other consequences.

To file your ITR on time and avoid a late filing penalty, you must be aware of the due dates. Here are the due dates for filing ITR for the assessment year 2024-25:

• The last date for individuals and entities not liable for audit is July 31, 2024

• The due date is October 31, 2024 for individuals whose accounts come under tax audit

• The last date for individuals covered under transfer pricing is November 30, 2024

• The due date for a revised return or belated return of income is December 30, 2024

Refer to the following table to know the late filing penalty for ITR for various incomes under Section 234F:

Here are some essential points to note:

• Late filing of ITR incurs a penalty and interest under Section 234A at 1% per month on outstanding taxes

• Losses, excluding house property losses, cannot be carried forward if the return is filed late

• House property losses can be carried forward even if the return is filed late

• File ITR before the due date to speed up refunds for excess taxes paid

Late filing penalties for ITR vary based on the taxpayers' category and income. See the table to understand this better:

If you make a mistake while filing your ITR, you can correct it by December 31 of the assessment year. This is a change from the previous rule, where you had a 2-year window to revise your ITRs. 

 

Now, the window has been reduced to 9 months from the end of the financial year. Therefore, the sooner you file your returns, the more time you will have to revise them if needed.

Filing your ITR late can lead to the following consequences:

Prosecution:

• The income tax officer can initiate prosecution proceedings if you fail to file ITR despite receiving notices

• This can result in imprisonment for a term ranging from 3 months to 2 years, along with a fine

• If the tax liability is substantial, the prosecution period may extend up to 7 years

Penalty:

• The income tax officer can impose a penalty of up to 50% of the tax due if you have underreported your income

Loss Set-off:

• You cannot carry forward losses other than house property losses to subsequent years if you have filed the ITR late

• You can carry forward losses under house property

Interest Charges:

• Under Section 234A, you need to pay an interest of 1% per month starting after the due date in case of filing your ITR late

• Delaying ITR filing can also result in increased interest payments

Delayed Refunds

• Filing returns before the due date can help you speed up the process of refunds for excess tax payments

In case you missed filing ITR for the last financial year, you have the following options:

Make an Application for Condonation Under Section 119(2)(b)

Here are the steps to follow:

1. Make an application with your jurisdictional officer for granting condonation. Clearly state the reason for seeking condonation.

2. After submitting your application, the IT department will issue a notice seeking details about your claim.

3. You can access this notice on the income tax portal by going to the 'E-file' tab or the 'Pending actions' section on your dashboard, preparing and submitting your reply online yourself or via your authorised representative.

4. Once your application for condonation is approved, file your ITR on the income tax portal and complete the filing process as usual.

File Updated ITR Under Section 139(8A)

Here are some essential points:

• Section 139(8A) of the ITA allows you to update your ITR within 2 years from the end of the year in which the original return was filed

• The introduction of ITR-U aims to streamline tax compliance while avoiding legal actions

• Filing ITR-U is mandatory only if it leads to additional tax liability

• If your return results in a refund or shows no tax liability, you do not need to file ITR-U under Section 139(8A)

In normal circumstances, filing returns via the offline mode is not accepted. Here are the conditions where paper return is acceptable:

• If you are above the age of 80 years

• If you are residing in areas with infrastructure deficiencies that make filing ITR online difficult

 

In such cases, the government issues notifications outlining the SOP for offline ITR submissions.