Penalty for Late Filing of Income Tax Return (ITR)

Income Tax Return is a crucial document taxpayers file with the Income Tax Department to declare their annual income every year. With the latest Form 16 and digitized filing process, the process of filing ITR has become much quicker and more efficient than ever. However, no one can stress enough the significance of filing the ITR before the last date. Neglecting this obligation and missing the deadline results in hefty penalties and adverse consequences.

The following sections will discuss the significance and benefits of filing ITR on time and the consequences of filing late income tax returns.

Due Date for Filing ITR for FY 2024-25

The due date for filing income tax returns remains the same each year unless the government extends it. For instance, the last date for 2020 was 31st December due to the pandemic. Missing the deadline may attract hefty fines and legal consequences. Therefore, remembering these due dates is essential according to the taxpayer category:

Category	Due Date
For individuals and entities without any tax audit liability	31st July 2024
For taxpayers covered under the tax audit, excluding cases of transfer pricing	31st October 2024
For taxpayers covered under transfer pricing	30th November 2024
For filing revised or belated returns	31st December 2024

Penalty for Late Filing u/s 234F

The penalty for late filing of ITR applies under Section 234F. For instance, if the due date for return filing is 31st July 2024 and the taxpayer misses that date, they can file a belated income tax return by 31st December 2024. However, an ITR late fee for the belated return will be applicable. A maximum penalty of Rs. 5,000 is payable if a taxpayer misses the due date for filing an ITR but files it before 31st December 2024. However, small taxpayers whose total income is under Rs. 5 Lakh have to pay a relieved maximum penalty of up to Rs. 1,000.

Here is a summary of charges for late filing of income tax returns under Section 234F:

Due Date for Return Filing	For Taxpayers with Total income Below Rs. 5 Lakh	For Taxpayers with Total income above Rs. 5 Lakh
Up to 31st July 2023	Nil	Nil
From 1st August 2023 to 31st December 2023	Rs. 1,000	Rs. 5,000

Also Read: How To File ITR For Salaried Employees?

Consequences of Late Filing of ITR

Let’s look into the consequences of filing a late income tax return.

Penalty for Late Filing of ITR: The Income Tax Department will impose an ITR late fee of up to Rs. 5,000 according to obligations under Section 234F.

Legal Proceedings: A taxpayer wilfully delaying the return filing will receive issuing notices from the Income Tax Department, leading to legal proceedings and prosecution. They may be imprisoned for 3 to 24 months with a fine. For a higher due amount, the prosecution period may be as long as seven years.

Penal Interest: In addition to the penalty for late filing of ITR, the Income Tax Department will also charge penal interest of 1% per month under Section 234A. The penal interest will keep accruing until the complete payment of the taxes.

Delayed Refunds: In case of excess tax payment, the taxpayer is entitled to receive a tax refund from the government. Delaying the ITR filing will also delay the refund process. Therefore, filing the income tax return on time is essential to receive the refund at the earliest.

Inability to Set Off Losses: In case of late ITR filing, the taxpayer cannot carry forward their incurred losses to subsequent years. Not filing the ITR before the due date will prevent taxpayers from setting off such losses against future gains. However, carrying forward the losses under house property is allowed.

Benefits of Timely Filing of ITR

Timely return filing projects a taxpayer as a responsible Indian citizen. Apart from that, it offers several other benefits, including the following:

• Avoids Penalty and Legal Consequences: Filing the income tax return on time will save the taxpayer from penalties and associated legal consequences.
• Tax Refund: In case of excess tax payment to the Income Tax Department, filing ITR before the due date will process the tax refund more quickly and efficiently.
• Loss Compensation: Filing the ITR on time allows taxpayers to carry their losses to the subsequent years. These losses can help set off against future income.
• Valid Address and Income Proof: An ITR filed on time serves as a valid address and income proof, which is necessary for visa and loan applications.
• Quick Loan Approval: When applying for a Personal Loan, Home Loan, or Auto Loan, the income tax return leads to easier and quicker loan approval.
• Easy Visa Processing: Most consulates and embassies request ITR copies for the last few years to process visa applications.

Also Read: How To File Income Tax Return Online In India

What if the Previous Financial Year's ITR is not filed?

If a taxpayer has not filed an ITR for previous years, they can raise a condonation request to file an online ITR for those years. For instance, in 2024, one may file an online return for FY 2022-23 by 31st December by raising a condonation request through the e-filing portal.

Steps of Condonation Request to File Previous Years' Return

These steps will help raise a condonation request to file previous years’ returns:

• Visit the income tax e-filing portal and log in.
• Click ‘Condonation Request’ on the ‘Services’ tab.
• Select 'Allow ITR filing after time-barred' and click 'Continue'.
• Click ‘Create Condonation Request’.
• Enter the required details, upload the return, and submit.
• Check the status to verify if the Income Tax Department has approved the condonation request.
• If approved, file ITR for the previous year.

Also Read: Form 16 In ITR - Everything You Need To Know

Conclusion

Considering the consequences of filing late income tax returns and the benefits of filing them on time, taxpayers should file their ITRs before the due date. If planning to apply for a loan at Hero FinCorp, one must file the returns and clear all penalties to boost their approval chances.

Frequently Asked Questions

1. What is the maximum penalty for filing a late return?

The maximum fine for late filing of ITR is Rs. 5,000.

2. How much will CA charge for income tax returns?

A CA’s charge for filing ITR may range from Rs. 1,500 to Rs. 2,000, based on the complexity of transactions.

3. Can I file an ITR for the previous 3 years?

A taxpayer cannot file tax returns for three years together in one go. However, in some cases, it might be possible with a condonation request and convincing evidence.

4. How do I file my 2-year-old ITR?

Under Section 139(4), one may file an ITR within 24 months from the end of the relevant AY.

5. What is the purpose of direct taxes?

Direct taxes serve multiple purposes, including revenue generation for the government to fund public services, redistribution of income to promote social equity and regulation of economic activities.

Disclaimer: The information provided is for educational purposes only. This is not financial advice. Readers should do their own research and consult financial advisors before making any decisions. We do not make any representations or warranties as to the accuracy or reliability of the information. Use it at your own risk.