What if I fail to file an income tax return on or before the due date?
Section 234F of the Income Tax Act, 1961
Fee is levied
You can file the return after the due date after paying late filing fees.
If you have an annual income of more than Rs 5 lakh per year and fail to file your income tax return by the due date, you must pay a fee of Rs 5000 if you file the return by December 31st of that assessment year. If you file after that date, you will be subject to an Rs.10,000 fee1.
If you have an annual income below Rs 5 lakh, you will be liable for a late fee of Rs 1,000.
This is a fee, not a penalty, and there is no waiver.
Setting off losses is not permitted.
If the return is not filed by the due date, you cannot offset these losses against future gains. However, if there are losses under house property, losses can be carried forward.
Interest will be charged for the delay in filing the return.
You shall be liable to pay interest at 1% per month2 or part thereof on taxes owed until they are paid in full.
It is critical to note that you cannot file an ITR unless you have paid your taxes. The interest calculation begins on the date immediately following the due date. As a result, the longer you wait, the more you will pay.
Foreign Tax Credit under form 67
If you want to claim credit for foreign taxes paid in a country or specified territory other than India, you must file Form 67. You will also be required to submit Form 67 if you carry back a current-year loss that results in a refund of foreign tax for which credit was claimed in any previous years.
To get the tax credit, form 67 must be filed before the return's due date3.
Update: 20 August 2022
CBDT amends Rule 128 of the Income-tax Rules, 1962, providing major relief to taxpayers in the matter of claiming Foreign Tax Credit (FTC). The Statement in Form No. 67 can now be furnished on or before the end of the relevant Asstt Year4.
The pre-amended Rule required the FTC claim to be filed by the due date of furnishing the Income Tax Return. The amendment operates retrospectively so that this benefit is available to all FTC claims filed during the current Financial Year.
Form 10E
Relief under section 89 can be claimed in the case of arrears or advances of any sum like salary. The assessee must file Form 10E to claim such relief. The Form must be submitted before the due date of filing the Income Tax Return.
If you fail to file Form 10E but claim relief under Section 89 in your ITR, your ITR will be processed but the relief claimed under Section 89 will be denied.
Deposit in Capital Gains Account Scheme
A taxpayer who is unable to re-invest capital gains in the specified investment before filing the return of income and whose specified time limit for the investment has not expired is required to deposit such unutilised capital gains under the capital gains account scheme - either as a savings deposit or as a term deposit - before filing the return of income but not later than the due date for filing the return of income.
In case, he fails to do so before the due date of filing of his return, he would not get the exemption.
Refund gets delayed
If you are entitled to a refund from the government for excess taxes paid, you must file your returns before the due date to receive your refund as soon as possible.
May deemed to be under-reporting of income
The income tax officer may consider this a case of income underreporting. In the case of under-reporting of income, a penalty of up to 50% of the tax payable may be imposed. Misreporting income could result in a levy penalty of up to 200 per cent of the tax owed on the misreported income5.
Prosecution Provisions for Non-Filing of the Income Tax Return
If a person does not file his ITR "intentionally" by the prescribed dates or on the issuance of any notice (s) by the tax authorities, he or she may face imprisonment for a minimum of 3 to 24 months as well as a monetary fine6. Furthermore, if the tax revenue that could escape assessment in any such case exceeds Rs. 25 lacs, there is a provision for 2-7 years of rigorous imprisonment in addition to the monetary fine.
This is a complex provision, and the preceding paragraph is a very simple explanation intended to provide an overview of the provision. Please seek clarification from tax professionals.
The text of the section (For the geeks)
234F. Fees for default in furnishing return of income.
Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of said section, he shall pay, by way of fee, a sum of,—
(a) five thousand rupees, if the return is furnished on or before the 31st day of December of the assessment year;(b) ten thousand rupees in any other case:
Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.
The provisions of this section shall apply in respect of return of income required to be furnished for the assessment year commencing on or after the 1st day of April 2018.".
Under Section 234F
Under Section 234A
The time limits as specified in section 139 (1).
Notification No. 100/2022
Under Section 270A
Under Section 276CC