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Penalty for Late Filing of Income Tax Returns

Filing ITR on time is the civic responsibility of individuals and entities. Tax authorities have the right to impose a penalty for late filing of ITR. These penalties reinforce the importance of adhering to tax deadlines.

An income tax return is a document that provides information about individual or business earnings through the period of the financial year. It is proof that the income generated throughout the fiscal year is legitimate.
 

There are various tax rates for different income slabs. Income tax returns or ITR can be filed online and offline. The income tax department also sends reminders or notifications to ensure that everybody files their income tax on time.

However, sometimes individuals or entities forget to do income tax e-filing on time. In that case, they need to pay fines and penalties.

In this blogpost, we will understand in detail the penalty for late filing of ITR.

What is the Penalty for Late Filing of ITR?

There are severe ITR filing last-date penalties, which are listed below:
 

  • Penalty Under Section 271H

    As per Section 271H of the Income Tax Act, if the taxpayer fails to file TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) returns on time, then he needs to pay the penalty or fine ranging from ₹10,000 to ₹100,000. Further, they must also pay a fine of ₹200/day until the tax is paid.
     

  • Penalty Under Section 234F

    Further, Section 234F of the IT Act states that if the taxpayer files the income tax return after the due date but before the end of the assessment year, i.e. 31st December, then they are liable to pay a penalty of ₹5,000 if the gross income is above ₹5 lakhs.

    However, if the taxpayer files an ITR after the assessment year, the penalty would be ₹10,000. Also, if the income is below ₹5 lakhs, the maximum fine would be ₹1,000.
     

  • Interest Penalty

    Under 234A of the Income Tax Act, if the taxpayer forgets to pay tax prior to the due date and has a tax charge or dues of over ₹10,000, then he has to pay the interest penalty of 1% every month until the dues is paid.

Other Consequences of Filing ITR After Due Date

There are other repercussions and consequences, apart from the ITR late filing penalty or fines. Let's have a look at these consequences.
 

  • Delayed Refunds

    Other than paying late fees for ITR, you will have to face another consequence: delayed refunds. Sometimes the TDS for individuals or entities gets deducted even if their income is under the basic exemption limit.

    In that case, by filing an ITR, individuals will get the return on time from the government. However, if you have filed the ITR after the due date, you will get your refunds late.
     

  • Delay in Filing Revised Returns

    Another consequence other than paying ITR late filing fees is a delay in filing revised returns. Making mistakes while filing the ITR is common since the process can be challenging. In that case, individuals have time to file the revised return after rectifying the mistakes within the decided time frame. But if you fail to file an ITR on time and you supposedly make any mistake in the ITR, then the revised return will also get delayed.
     

  • Limitations to Setting Off Losses

    Further, another significant consequence other than paying late fees for filing the ITR, is that taxpayers cannot carry forward losses from business or profession. However, if the losses arise from the house property, then it can be carried forward.
     

  • Prosecution

    Lastly, if the taxpayer did not file ITR on time or failed to file ITR, then the income tax department has the right to initiate legal proceedings against the defaulter. However, the authorities first send out multiple legal notices to taxpayers, and if they fail to respond, they can start legal proceedings.

    If a taxpayer turns out to be guilty, it can lead to 3 months to 2 years imprisonment. Further, they also need to pay the fine to the authorities.

Tips to Avoid Penalties or Late Fees for ITR

Here are some tips that can help taxpayers to avoid the ITR filing penalty:
 

  • It is best to keep track of the due date and file ITR on time.
  • Use the correct income tax form as applicable to your income.
  • It is best to disclose everything while filing an ITR, including your gross income, interest, capital gains, rent, etc.
  • Ensure that all the filled details are correct and accurate to avoid any penalties.

Conclusion

Timely submission of ITR is necessary to avoid any penalties and fines. If an individual fails to do income tax e-filing on time, then it can lead to severe repercussions. Also, an individual must file income tax on time to avoid difficulties in obtaining loans and other financial services. With that in mind, always file your income tax returns on time.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Frequently Asked Questions

Can we file the ITR after the due date?

Taxpayers who file ITR after the due date must pay the penalty as the authorities decide.

What is the penalty for filing an ITR after the due date?

There are several penalties decided under the Income Tax Act. Under section 271H, taxpayers must pay the fine ranging from ₹10,000 to ₹100,000. However, under Section 234F, they must pay a fine of ₹5000 if the gross income is over ₹5 lakh. Other than this, there is also an interest penalty under Section 234A.

What happens if you miss to file an ITR?

If taxpayers miss filing an ITR on time, they have to pay monetary penalties decided by the authorities.

Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to the Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication. However, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  •  Tax: *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.